Report Indicates FDIC Suing Bank Directors And Officers At Record Pace

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On May 8, an economic and financial analysis and consulting firm issued a report that indicates the FDIC is on pace to file more suits against bank directors and officers in 2013 than it has in any year since the start of the financial crisis. The report states that as of April 22, 2013, the FDIC has seized eight institutions and filed at least 12 lawsuits against officers and directors, and that trends suggest that substantially more FDIC cases may be filed in the coming months. Other key findings from the report include: (i) of the 476 financial institutions that have failed since 2007, 55, or 12%, have been the subject of FDIC D&O lawsuits, (ii) CEOs continue to be the most commonly named defendants, though outside directors have been named in 75 percent of all filed complaints, (iii) the 12 suits filed in 2013 included allegations of gross negligence and breach of fiduciary duty, and (iv) of the 44 settlement agreements involving directors and officers (regardless of whether a lawsuit was filed), as many as 17 agreements, or 39 percent, required out-of-pocket payments by the directors and officers.

Topics:  Board of Directors, FDIC, Officers

Published In: Business Organization Updates, Business Torts Updates, Finance & Banking Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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