Special Liability Risks for Director Appointees to Banking Organizations

Banking practice co-chair Mark Nuccio has co-authored an article for the February issue of The Banking Law Journal that looks at the heightened legal requirements an individual appointee on the board of a banking organization faces, regardless of whether the appointer is a controlling or non-controlling investor. The topic is particularly timely as private equity and hedge fund investment in the banking sector continues to increase.

In “Special Liability Risks for Director Appointees to Banking Organizations,” Nuccio and his co-authors, counsel Paulo Marnoto, write that these requirements expose the appointee to “a greater risk of personal liability and enforcement action by federal regulators. And with looming regulatory reform proposals in Congress, the burdens of being a bank director are likely to become greater.”  Among the specific legal requirements and risks the authors discuss are common law causes of action against bank directors; enforcement actions against bank directors as institution-affiliated parties, including civil monetary penalties and cease-and-desist orders; and removal, prohibition and suspension orders.