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In the FDIC's latest lawsuit filed in its role as receiver of a failed bank, the FDIC not only named as defendants nineteen former directors and officers of the failed bank, but also included as defendants seventeen of their spouses and the failed bank's D&O insurer. A copy of the FDIC's January 18, 2012 complaint, filed in the agency's capacity of receiver of the failed R-G Premier Bank of Puerto Rico, can be found here. UPDATE: See also the note below regarding the separate action filed in the District of Puerto Rico, involving the directors and officers of the failed Westernbank Puerto Rico, which also involves D&O insurer defendants.
As discussed here, R-G Premier Bank failed on April 30, 2010. According to the FDIC's complaint, its closure represented "one of the largest bank failures in Puerto Rico's history, costing the Deposit Insurance Fund over $1.46 billion in losses."
In its complaint, the FDIC asserts claims for gross negligence against certain former directors and officers of the failed bank, alleging that the bank's losses and ultimate failure arose from the bank's aggressive commercial lending. The complaint alleges that the commercial lending operations were essentially unsupervised, even though the commercial lending department "recklessly" pursued "explosive commercial loan growth." The complaint alleges that the director and officer defendants "ignored numerous warnings from multiple sources about serious problems" in the bank's management and lending operations."
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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