Four former officers of now-defunct Penson Financial Services, Inc., once the second largest clearing US broker-dealer, and of Penson Worldwide, Inc., its publicly traded parent company (collectively, "Penson"), were charged by the Securities and Exchange Commission with a series of accounting and disclosure failures related to Penson’s extension of margin loans to certain customers in excess of amounts permitted under federal securities laws. According to the SEC, PFSI made approximately US $100 million of margin loans between 1999 and 2008 to Christopher Hall and his affiliates, including Call Now, Inc., substantially secured by distressed municipal bonds related to “a financially struggling horse racetrack” operated by Call Now in Texas. (In 2006 Call Now became the largest shareholder of PWI.) However, when the margin collateral “plummeted in value” during the financial crisis of 2008, PFSI failed to liquidate Hall’s and his affiliates’ collateral to avoid realizing large losses for Penson. Instead Penson increased the amounts of margin loans to these customers. The SEC claimed that Penson should have recognized losses on the loans as early as 2009, but did not do so until 2011. Thus, Penson’s broker-dealer's and public company's required financial statement filings with it for year-ends 2009 and 2010 were not in conformity with generally accepted accounting principles, said the SEC. The four former officers were Philip Pendergraft, a co-founder, director and chief executive officer of PWI and an executive vice president of PFSI from 1995 to 2012; Kevin McAleer, PWI’s chief financial officer from 2006 to 2012; Thomas Johnson, a director of PWI from August 2003 to May 2011 and also a director of Call Now from 2001 to 2011; and Charles Yancey, PFSI’s president and CEO from 2005 to 2012. To settle this matter, the four individuals agreed to pay fines totaling US $175,000 and various undertakings. Simultaneously with this action, the SEC filed a separation complaint against Mr. Hall.