A fine of $9.5 million against a Maryland bank was assessed Tuesday for violation of insider trading rules, and its chief executive has been barred from working in the banking industry, the Federal Reserve said this week.
The fine against EagleBank, of Bethesda, Md., the Fed said, came after the agency found that the bank had deficient internal controls over insider lending practices between 2015 and 2018. That deficiency, the agency said, allowed the bank to extend credit totaling nearly $100 million to entities owned or controlled by bank CEO and Chairman Ronald D. Paul. The Fed said the credit extensions, which also included those made to certain family trusts, were made without appropriate disclosures to, or obtaining required approvals from, a majority of the bank’s board of directors.
Paul has been permanently barred from employment in the banking industry and faces a $90,000 fine against him for his “central role” in the bank’s violations of law and unsafe and unsound banking practices, the agency said.
Paul faces more fines from another federal agency, the Securities and Exchange Commission (SEC), which said he will pay about $521,000 to settle agency actions. The bank also will pay fines of about $22.9 million from the SEC, the Fed said.
Eaglebank was also cited 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, the agency said.
Federal Reserve Board announces it has fined EagleBank $9.5 million for violation of the Board’s insider lending regulation and has permanently barred its former CEO and chairman from the banking industry