March 4, 2010
M&A Proxy Disclosures: Another SEC Enforcement Action
Bank of America is not the only company facing the wrath of the SEC’s Enforcement Division for alleged misleading proxy disclosures. Yesterday, the SEC charged an Iowa insurance company and two executives with proxy disclosure violations, alleging that they inadequately disclosed details about the acquisition of another company and the resulting financial boon to the then-CEO. Unlike the more immediate BofA case though, the SEC’s action is based on a proxy disclosure made four years ago. Still, this case is notable as a reminder that the SEC is bringing proxy disclosure cases these days.
Here is an excerpt from the SEC’s press release:
According to the SEC’s complaint, filed in federal court in Des Moines, the company did disclose that immediately prior to its acquisition of a financing company wholly-owned by Noble, he received a $2.5 million distribution from the acquired company. However, the SEC alleges that American Equity did not disclose that the acquired company had a large deficit at the time of the distribution, and that this acquisition of Noble’s company effectively relieved him of substantial potential personal liability for the acquired company’s debts.