By Dean Seal

 

Eagle Bancorp Inc., better known as EagleBank, has agreed to pay regulators $22.9 million to resolve allegations that it failed to properly disclose nearly $100 million in loans made to family trusts controlled by its former chief executive.

The U.S. Securities and Exchange Commission said in an administrative order that from March 2015 to April 2018, the Maryland-based bank failed to disclose loans extended to former chairman and CEO Ronald D. Paul's trusts as "related party transactions" in its financial records.

The U.S. Federal Reserve Board also has taken action against the bank, accusing it of extending the credit without making the requisite disclosures or obtaining approvals from EagleBank's directors.

Without admitting or denying the allegations, EagleBank has agreed to resolve the SEC's case with a $10 million fine and about $3.4 million in disgorgement and interest. The bank will pay another $9.5 million penalty to settle the Fed's allegations.

"We are pleased that the SEC and FRB have approved the settlements and we can now put these legacy matters behind us," Chief Executive Susan Riel said.

Both the Fed and the SEC have taken separate actions against Mr. Paul, who retired suddenly from the bank in 2019. Months later, EagleBank disclosed in regulatory filings that it was dealing with "investigations and related document requests and subpoenas from government agencies."

The SEC said in a civil complaint filed in New York federal court that Mr. Paul misled investors about the loans and violated the agency's negligence-based antifraud and proxy provisions. Without admitting or denying the allegations, he has agreed to pay a $300,000 fine and more than $131,000 in disgorgement and interest.

The Wall Street regulator also is seeking to bar Mr. Paul from serving as an officer or director of a public company for two years. The settlement is subject to court approval.

The Fed meanwhile has permanently barred Mr. Paul from working in the banking industry and assessed a $90,000 fine against him.

In a statement, Mr. Paul's attorney said the SEC's action against EagleBank included allegations related to the former CEO that are "false, misleading and unsupported by credible evidence."

"The SEC did not include those allegations in its separate action against Mr. Paul - and knew that if it did, Mr. Paul would have refused to settle his case and would have aggressively disputed those false and misleading allegations," attorney Lance Wade said.

 

Write to Dean Seal at dean.seal@wsj.com

 

(END) Dow Jones Newswires

August 17, 2022 12:04 ET (16:04 GMT)

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