FDIC: Kansas banker assessed $35k penalty, ordered to undergo training after 100+ violations of federal insider lending rules

A Kansas banker who reportedly committed a combined 107 violations of federal insider lending rules was required to pay a $35,000 civil money penalty and undergo training under a December, combined consent order released Friday by the Federal Deposit Insurance Corp. (FDIC).

In the combined order, the FDIC said Joseph A. Smith, while serving as bank board chairman and chief executive officer for Goppert State Service Bank of Barnett, Kan., directed bank employees to deposit proceeds from more than $6 million in extensions of credit the bank made to his brother into an account owned by Smith’s “related interest.”

It said these extensions, while repaid, resulted in more than 30 violations of the Federal Reserve Board’s Regulation O insider lending limits from March 2019 through February 2020; plus 77 violations from November 2017 through February 2020 of Reg O’s requirement to obtain prior approval from the bank’s board for loans to insiders exceeding 5% of the bank’s unimpaired capital and unimpaired surplus.

In addition to paying a $35,000 penalty, Smith was required under the consent order to attend a training session related to the rules violated as well as provide a copy of the order to the board of any insured depository institution where he is employed or offered employment, “or otherwise becomes an institution-affiliated party.”

Smith consented to the order without admitting or denying any rule or law violations, the agency said.

The above order was one of 17 administrative enforcement orders issued by the FDIC in December. The agency said the others included one order to pay a civil money penalty (flood insurance violations), two consent orders, two Section 19 orders, four prohibition orders, and seven orders of termination of insurance.

FDIC Makes Public December Enforcement Actions