The Securities and Exchange Commission (SEC) late Friday charged three former senior executives of IndyMac Bancorp with securities fraud for misleading investors about the Alt-A giant's deteriorating financial condition.

Once a unit of Countrywide Financial Corp. (CFC), IndyMac was actually the brainchild of former CFC CEO Angelo Mozilo. After forming IndyMac in the 1980s, CFC eventually spun off the company, which for many years was lead by Mozilo protege, Michael W. Perry.

The Pasadena-based IndyMac, which went from being a REIT to a thrift, failed in the spring of 2008 and was taken over by the Federal Deposit Insurance Corp. At the time it was one of the costliest thrift failures in history. 

Not only was IndyMac a top ranked Alt-A lender and servicer, it made warehouse lines of credit and funded apartment loans.  During the early days of the housing bubble, its delinquencies began to soar and "hot money" depositors pulled their funds out of the thrift.

Perry, who served as chairman and CEO, and former CFOs A. Scott Keys and S. Blair Abernathy are accused of filing "false and misleading disclosures about the financial stability of IndyMac and its main subsidiary, IndyMac Bank F.S.B.," according to a statement released by the SEC.

The agency says the three "regularly received internal reports about IndyMac's deteriorating capital and liquidity positions in 2007 and 2008, but failed to ensure adequate disclosure of that information to investors" who eventually lost millions of dollars by purchasing the lender's stock.

The SEC alleges that in summer 2007 while serving as IndyMac's executive vice president in charge of specialty lending, Abernathy made false and misleading statements about the quality of the loans in six IndyMac MBS offerings totaling $2.5 billion.

Investigators say Abernathy received internal reports each month revealing that 12% to 18% of IndyMac's mortgages contained "misrepresentations regarding important loan and borrower characteristics."

Late Friday the three defendants could not be reached for comment.

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