Former Indymac Bank CEO Michael Perry is asking the 9th Circuit to review the reach of California’s business judgment rule, which assumes that company directors’ actions are motivated by its best interests, and determine whether it also protects corporate officers from legal liability.
The lawsuit that the Federal Deposit Insurance Corporation brought against Perry claims that he acted negligently by overseeing the pooling of $10 billion into risky loans toward the end of the housing bubble, a move that lost Indymac more than $600 million.
A district court ruled on Feb. 21 that California’s business judgment rule does not shield Perry from liability. But in his appeal, which he filed on Friday, Perry argues that though the business judgment rule applies only to directors, the common law component of the rule could be interpreted to protect corporate officers. The filing claims that if the 9th Circuit finds otherwise, California would be the only state to interpret its business judgment rule that way.
Learn more about the case, and read Perry’s filing, in the Wall Street Journal.