EagleBank to Pay U.S. Regulators $22.9 Million Over Insider Lending -- Update
17 Agosto 2022 - 01:19PM
Dow Jones News
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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