SEC Says FCA Founder Made Illegal Trades

The Securities and Exchange Commission on Monday charged Financial Corp. of America founder Charles S. Offer with illegal insider trading in FCA stock while he was a member of the savings and loan company’s board of directors.

The SEC also charged that Offer illegally profited from trading in First Charter Financial Corp. stock just before the firm was acquired by FCA.

Offer agreed to repay his $3,625 in First Charter stock trading profits and settled both SEC charges without admitting that his actions violated federal securities laws.

“I didn’t do anything wrong,” Offer, 73, said in a telephone interview. “I didn’t admit or deny anything in the consent decree, and it was just too costly to fight the SEC or the government. That was it, period.”

Access to Information

FCA, based in Irvine, is the parent of American Savings & Loan Assn., headquartered in Stockton, the nation’s largest thrift with $27.4 billion in assets.

The SEC charges involve laws against stock trading based on information not available to the public. It said Offer had access to such information because of his position as a member of the FCA board of directors and its executive committee. He resigned from the board last April.

In its complaint, the SEC said Offer sold 29,000 shares of FCA common stock and 700 shares of preferred stock between Feb. 27 and March 1, 1985, after learning at a Feb. 26 board meeting that the company would announce 1984 losses of between $400 million and $700 million. FCA publicly disclosed on April 1, 1985, that it had lost $590.5 million in 1984.

Offer canceled the stock sales March 7, when he was told by FCA attorneys that the transactions would be reported to the SEC.

First Charter Purchase

Offer said Monday that he has since disposed of “practically all” of the 69,000 shares of FCA common stock and 700 preferred shares held in his name and in a family trust.

The agency also said Offer bought 1,000 shares of First Charter stock in December, 1982, on inside information that FCA would acquire First Charter. Offer’s stock purchase brought him a $3,625 profit after the merger was announced in January, 1983. Under the SEC decree, Offer will forfeit those profits.

Layna Browdy, an FCA spokeswoman, said: “It’s not appropriate for the company to comment on a matter between a former director and the SEC since we have no involvement.”

Offer founded Budget Finance Plan, a consumer finance company, in 1937 and oversaw its growth into one of the nation’s largest diversified financial companies. He retired from active management of the firm that came to be known as Financial Corp. of America in 1977 but remained on its board.

The firm’s size quadrupled in 1983 when it merged with American Savings & Loan Assn., engineered by Charles W. Knapp, then chairman of FCA. But the high-flying company crashed in 1984, suffering the biggest annual loss in the history of U.S. savings institutions, largely because of bad real estate loans.

Federal regulators forced Knapp’s ouster in the summer of 1984 during a massive run on the thrift unit’s deposits.