BETHESDA, Md.—The Federal Reserve has fined EagleBank here $9.5 million for violation of the insider lending regulations, while the SEC has also announced fines for the bank and its former CEO.
The bank improperly extended credit to entities owned or controlled by its then-CEO and Chairman, Ronald D. Paul, the Fed stated.
The Fed said it found EagleBank had deficient internal controls over insider lending practices between 2015 and 2018, which allowed the bank to extend credit totaling nearly $100 million to entities that Paul owned or controlled, including certain family trusts, without making appropriate disclosures to, or obtaining required approvals from, a majority of the bank's board of directors.
“These internal control deficiencies also extended to the bank's supervision of lending staff, who permitted Paul to participate in matters in which he had a conflict of interest,” the Fed said. “The Board also cited EagleBank for third-party risk management deficiencies over the same period that resulted in inadequate oversight of contracts between the bank and a local government official.”
Permanent Ban
The Federal Reserve said it has permanently barred Paul from employment in the banking industry and assessed a $90,000 fine against him for his central role in the bank's violations of law and unsafe and unsound practices.
In conjunction with Fed actions, the Securities and Exchange Commission said it has also reached its own settlement of actions against Paul and EagleBank's holding company, Eagle Bancorp, Inc. In total, the bank and holding company will pay approximately $22.9 million and Paul will pay approximately $521,000 to settle the agency actions, the Fed said.
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