(Updates with agreement to settle, context)
WASHINGTON, July 16 (Reuters) - The former chief executive of Energy XXI Ltd agreed to settle civil charges that he failed to disclose to investors more than $10 million in personal loans obtained from company vendors and a candidate for the company's board, the U.S. Securities and Exchange Commission said.
John D. Schiller Jr agreed to settle the case without admitting or denying the charges, by paying a $180,000 penalty and not serving as an officer or director of a public company for five years, the SEC said on Monday.
The agreement is pending approval by a U.S. district court judge in Houston.
"Mr. Schiller cooperated fully with the SEC in its investigation and is happy to put this matter behind him with this settlement," Schiller's attorney, Barrett Reasoner, said.
The SEC alleged Schiller maintained an extravagant lifestyle using a leveraged margin account secured by his shares in the oil and gas producer. When oil prices tumbled in 2014 and he was faced with margin calls, Schiller accepted more than $7.5 million in personal loans from companies that did business with Energy XXI, the SEC claimed.
"Executives of public companies have a duty to act in the best interests of investors," said Anita Bandy, an assistant director in the SEC's Division of Enforcement. "Secret backroom deals for the benefit of corporate insiders violate those duties and deprive investors of important information."
Schiller also did not disclose that he obtained a $3 million loan from Norman Louie, a portfolio manager at Energy XXI holder Mount Kellett Capital Management LP. Louie was appointed to the company's board of directors two weeks later.
Louie agreed to pay a $100,000 penalty and Mount Kellett agreed to pay $160,000, to settle the charges, the SEC said.
The case is SEC vs John D. Schiller Jr, U.S. District Court, Southern District of Texas, No. 4:18-cv-02433. (Reporting by David Alexander; additional reporting by Gary McWilliams in Houston Editing by Mohammad Zargham and Susan Thomas)