Maryland bank to pay $22.9 mln for concealing loans to ex-CEO's trusts (updated)

Eagle Bancorp

16/08/2022 23:12

(Adds allegations and settlement details, comment from bank and
lawyer for former CEO, bylines)
    By Jonathan Stempel and Ismail Shakil
    Aug 16 (Reuters) - A Maryland bank agreed to pay about $22.9
million to settle charges by two U.S. regulators that it failed
to disclose tens of millions of dollars of loans to family
trusts belonging to its former longtime chief executive officer.
    Eagle Bancorp Inc  EGBN.O , of Bethesda, Maryland, will pay
$19.5 million in civil fines and more than $3.35 million in
disgorgement and interest to settle with the Federal Reserve
Board and the Securities and Exchange Commission (SEC), the
regulators said on Tuesday.
    Ronald Paul, 66, of Potomac, Maryland, an Eagle founder who
was CEO from 1997 until he retired in 2019, agreed to pay about
$521,000, of which $390,000 represented civil fines. The Fed
permanently banned him from working in the banking industry.
    Neither Eagle nor Paul admitted or denied wrongdoing.
    Both were pleased to put the matter behind them, according
to separate statements from Eagle CEO Susan Riel and Lance Wade,
a lawyer for Paul.
    Wade also said the SEC consent order against Eagle included
allegations concerning Paul that were "false, misleading, and
unsupported by credible evidence," and Paul would have disputed
them had the SEC included them in its action against him.
    Regulators accused Eagle of having from 2015 to 2018
extended approximately $90 million of credit to entities that
Paul owned or controlled, without disclosing it to investors in
periodic reports and proxy statements.
    The SEC also said that after short seller Aurelius Value in
December 2017 questioned the loans to Paul's trusts, Eagle and
Paul falsely assured investors that the loans were proper.
    "Adequate disclosures of related party transactions are
essential to enable investors to evaluate an issuer's corporate
governance," Sanjay Wadhwa, deputy director of the SEC
enforcement division, said in a statement.
    Eagle has 20 banking offices in Washington, D.C. and
suburban Maryland and Virginia.

 (Reporting by Jonathan Stempel in New York and Ismail Shakil in
Ottawa; editing by Richard Pullin)
 ((ismail.shakil@tr.com;))