Monthly Archives: May 2012

U.S. Judge Manuel L. Real’s Signed “Findings of Uncontroverted Facts and Conclusions of Law”

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U.S. Judge Manuel L. Real’s Signed “Order Granting Partial Summary Judgment in Favor of Perry and Keys”

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M. Perry Motion in Limine to Exclude Analyst Testimony


“In obtaining these declarations, the SEC asked the analysts to assume the truth of the SEC’s characterizations of the information purportedly omitted from Indymac’s SEC filings, and to speculate about how they might have reacted in May, 2008……years before the declarations were signed….had they known such purported facts. At the same time, the SEC…..which purports to demand full and accurate disclosure from others…..did NOT disclose to the analysts critical information about what actually transpired. For instance, the SEC did not disclose the crucial fact that the Bank’s principal federal regulator, the Office of Thrift Supervision (“OTS”) , approved Indymac Bank including the $18 million capital contribution in calculating the Bank’s capital ratio for the first quarter of 2008, and that Indymac’s outside auditor, Ernst & Young (“E&Y”), likewise had no objection to the Bank doing so……Indeed, analyst Jason Arnold has acknowledged that the SEC’s misinformation seriously skewed the views he expressed in his declaration.”

Click here to access Jason Arnold’s January 29, 2012 declaration (based on the SEC’s misinforming him).

Click here to access Jason Arnold’s May 3, 2012 declaration (based on the proper information).

Click here to access the full Motion in Limine to Exclude Analyst Testimony.

M. Perry’s Motion in Limine to Exclude Testimony of Professor Anthony Saunders


“Saunders testified that the best indicator of materiality is a company’s stock price.”

“Indeed, Saunders testified that, “(n)aturally,” such a stock-price analysis was “the first thing” he did in this case to assess whether the alleged misstatements and omissions were material.”

“When he found that this analysis could not support the SEC’s allegations, however, Saunders “didn’t keep it (he had it destroyed or discarded) because for obvious reasons I wasn’t using it”.”

“Instead, Saunders elected to submit an expert report containing materiality opinions based on his subjective speculation about what reasonable investors may have deemed important.”

“Whatever expertise Saunders may have with respect to the operations of “commercial banks and other financial institutions,” he acknowledges that he is not an “expert on disclosure”….He has no way of knowing how investors would have interpreted additional disclosures about Indymac in 2008 without more rigorous analysis.”

“The remainder of Saunders’ report…indeed, the bulk of the report…..consists of a slanted, narrative recounting of Indymac’s public filings, analyst reports, and the SEC’s allegations. This testimony is in admissible, as it will not “help the trier of fact to understand the evidence” in this case.”

“Indeed, in restating the contents of these documents, Saunders does not even attempt to place them in the context of the “total mix of information” available to investors at the time, in order to aid the Court’s understanding of whether additional information would have been material.”

“In order to reach these conclusions, he “assume(d) that the facts alleged in the SEC’s Complaint in this case are true”…..”

(Professor Saunders states, ‘For the purposes of preparing this report and developing the opinions expressed herein, I assume the facts as alleged in the SEC’s complaint in this case are true.’ (Saunders Report Paragraph 8).)

“Because Saunders’ materiality opinions are speculative and unreliable, they should be excluded. Similarly, Saunders’ interpretation of newspaper articles, analyst reports, and other non-technical sources would be of no assistance to the Court and is therefore inadmissible.”

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Transcript of Partial Summary Judgment Motion Hearing Before Judge Real

“For these reasons, Defendants Perry and Keys’ motion for partial summary judgment are hereby granted.”
Manuel L. Real, U. S. District Judge Presiding

Other Excerpts from Judge Real’s Decision:

“Therefore, the Form 10-K clearly discloses that Bancorp was raising capital pursuant to DSPP.”

“Therefore, Bancorp was not required to disclose the February 19 capital ratio forecast.”

“This statement (regarding funding/liquidity capacity) was thus true, as stock sales pursuant to the DSPP did not begin until February 26th of 2008.”

“Here, Bancorp disclosed that the market for mortgage-backed and asset-backed securities had been significantly disrupted; that such disruptions may negatively impact the bank and market liquidity; that there were material risks to the bank’s well-capitalized status; and that interest rate changes, real estate value drops, and other economic fluctuations then occurring could impact capital requirements.”

“Therefore, the February 12th, 2008, Form 8-K was not incorporated by reference into the DSPP prospectuses and registration statement.”

“Because Defendants in no way participated in the preparation and release of the prospectuses, they cannot be held liable for their content.”

“The S-3 registration statement signed by the Defendants did not incorporate the DSPP prospectuses by reference because the S-3 registration statement was signed before the DSPP prospectuses were made.”

“These deferrals were publicly reported on Monday, May 12th, 2008. It is undisputed that the deferral was reported within two business days of the vote. While Mr. Perry had already told the board on April 24th that they planned to defer the dividend, a mere expression of management’s opinion is not actionable if they lack the authority to enforce that opinion.”

“The SEC’s power to obtain injunctive relief has been broadly read to include disgorgement of profits realized from violations of the securities laws……Here, Perry did not sell any Bancorp stock between 2006 and 2008, received no bonus between 2007 and 2008, and lost almost the entire value of his Bancorp stock when the company filed for bankruptcy…..The SEC has failed to demonstrate that Defendants’ salaries and benefits would not have been given but for the (alleged) illegal conduct.”

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M. Perry’s Memorandum of Contentions of Fact and Law

We filed this document with the Court last Friday and I was going to tell you that I think this document is an excellent summary of the case and my defense points regarding the SEC’s meritless allegations. However, on Monday, May 21, 2012 we had some very good news. At a hearing on our Partial Summary Judgment Motion, Judge Real granted our motion in its entirety (see Statement 14). As a result, Section III. A,B,C, D, E, H, and N no longer apply (although I would encourage you to read them, because even though the judge dismissed these allegations, it will help you understand that while he may have dismissed a few of them on technical, legal grounds; that even if he had not, they had no merit even on more substantive grounds and we would have prevailed at trial).

In essence, two SEC allegations remain: Section III.F and III.G. Because these allegations occurred after Mr. Keys had taken a medical leave of absence, there is a strong possibility he may be dismissed from this lawsuit. I am very happy for him, but will continue to fight on until these final two meritless allegations are resolved in my favor.


“Despite these extensive disclosures, which the SEC does not dispute, and despite the fact that the SEC takes no issue with Bancorp’s accounting or financial reporting, the SEC has charged Mr. Perry with securities fraud based on a few alleged foot faults in Bancorp’s disclosures during a 90-day period between February and May 2008. The SEC’s claims are baseless. As explained below, to prove fraud the SEC has the burden of establishing that Mr. Perry made false or misleading statements; that such statements were material to a reasonable investor in light of the total mix of information available; and that Mr. Perry acted with scienter (or at least negligently). It cannot come close to meeting this burden.”

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Reply Memorandum in Support of Mr. Perry’s Motion for Partial Summary Judgment

Excerpts from the Reply Memorandum:

“The SEC seeks to muddy the waters on summary judgment by overwhelming the Court with 126 exhibits totaling almost 3,000 pages, and making irrelevant arguments concerning matters beyond the scope of Mr. Perry’s motion. Notwithstanding the SEC’s efforts to obfuscate, the issues before the Court are straightforward and ripe for summary resolution…”

“These are all straightforward summary judgment issues that may be resolved short of trial without reference to the SEC’s mountain of extraneous evidence. The Court need not consider the SEC’s argument that Bancorp engaged in a ‘scheme’ to artificially inflate the Bank’s capital ratios because that claim, while baseless, is not part of Mr. Perry’s motion for partial summary judgment. The Court likewise need not consider the SEC’s irrelevant evidence on materiality because the SEC cannot meet its threshold burden of showing that Mr. Perry made actionable false or misleading statements in the filings at issue in the motion. To rule in Mr. Perry’s favor, the Court need only review the plain language of Bancorp’s SEC disclosures and the handful of undisputed facts noted above. That plain language and those few undisputed facts show that Mr. Perry is entitled to partial summary judgment under Fed. R. Civ. P. 56…”

“For the foregoing reasons and the reasons stated in our Opening Brief, Mr. Perry’s motion for partial summary judgment should be granted. The Court should dismiss: (a) the SEC’s disgorgement claim against Mr. Perry; (b) the SEC’s claims against Mr. Perry based on Bancorp’s February 12, 2008 8-K; (c) the SEC’s claims against Mr. Perry based on Bancorp’s February 29, 2008 10-K; (d) the SEC’s claims against Mr. Perry based on Bancorp’s DSPP prospectuses; (e) the SEC’s claim that Mr. Perry had a continuing duty to update the foregoing documents; and (f) the SEC’s claim that Mr. Perry fraudulently delayed disclosure

of the decision to suspend the payment of dividends on preferred securities issued by Bancorp and the Bank…”

Click here to access entire Reply Memorandum