American Equity Investment Life Holding Co. said Wednesday that it reached civil settlements with the U.S. Securities and Exchange Commission (SEC) for allegedly violating proxy statement provisions of federal securities laws. As part of the settlements, American Equity Chairman David Noble agreed to pay a civil monetary penalty of $900,000, and CEO Wendy Waugaman will pay a civil penalty of $130,000, the company said. The settlement does not require American Equity to pay a monetary penalty.

The publicly traded West Des Moines-based insurance company is a leading underwriter of index and fixed-rate annuities, with $21 billion in total assets and an investment portfolio of $15 billion.

According to the SEC’s complaint, filed in federal court in Des Moines, the West Des Moines-based company did disclose that immediately prior to its acquisition of a financing company that is 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.

“The actions of these executives and their company denied shareholders their right to complete and accurate information about related party transactions,” Merri Jo Gillette, director of the SEC’s Chicago regional office, said in a press release. “Companies cannot make misleading and incomplete disclosures about transactions that financially benefit their top executives.”

According to the SEC’s complaint, American Equity acquired Noble’s company for $1 in September 2005. The SEC alleges that American Equity’s 2006 proxy statement disclosure about the acquisition was materially misleading because it failed to fully disclose the financial benefits to Noble from the acquisition. The SEC’s complaint also alleges that American Equity’s proxy statement disclosure relating to Noble’s compensation, which described Noble as modestly compensated and unwilling to accept additional salary or bonus, was materially misleading in light of the significant benefits he received from American Equity’s acquisition of the company he owned.

Under the agreements, the settling parties neither admitted nor denied SEC claims.

“This settlement concludes the SEC’s review of this matter,” Robert Howe, American Equity’s lead independent board member, said in a press release. The company had received a Wells Notice in May 2009 notifying it that it faced a civil action for possible violations of securities laws. “The inquiry concerned issues that occurred more than four years ago. We are pleased that this resolution puts this matter behind us. The company is focused on its ongoing success and we look forward to continuing to serve our investors, independent agents, policyholders and employees.”

In connection with the agreement, American Equity agreed to an order enjoining it from violating proxy statement provisions of federal securities laws, to maintain remedial measures initiated during the SEC inquiry, including the establishment of a disclosure committee to assist its senior officers in overseeing the accuracy and timeliness of disclosures, and the appointment of a lead independent director.