News & Events

News & Events


Preparing for the Next Wave of FDIC Suits Against Bank Directors and Officers

Bookmark and Share

Lane Powell Shareholder Larry Gangnes authored an article in the Winter 2011 issue of Community Banker magazine titled “Preparing for the Next Wave of FDIC Suits Against Bank Directors and Officers.” In the article, Gangnes discusses the recent Federal Deposit Insurance Corporation (“FDIC”) announcement that it has authorized suits to recover “more than $7.2 billion in damages” from former executives of banks that have closed since January 1, 2008.

Directors and officers are the most likely FDIC targets for recovery claims since, in many cases, they are covered by ‘D&O’ insurance. Typically, the FDIC asserts claims for negligence, gross negligence and breach of fiduciary duty. The most common claims are for dishonest conduct or approval of abusive insider transactions, violations of law and regulations or internal bank policies, failure to heed warnings from regulators and advisers, and poor bank underwriting policies and practices. The FDIC may also seek restitution or indemnification from executives for unjust enrichment or reckless disregard of any law, regulation or regulatory directive, and civil penalties of up to $1 million.

Read the full article (PDF).