Reuters: FDIC is probing former First Republic Bank directors and officers
Reuters is reporting the Federal Deposit Insurance Corporation (FDIC) is investigating potential misconduct by executives and board members of First Republic Bank.
"We can confirm a D&O probe into First Republic is taking place," a spokesperson told Reuters on Wednesday, referring to the bank's directors and officers. The regulator did not provide further details.
Under federal law, the FDIC can ban former directors and officers from the industry, and impose fines for breaching their fiduciary duty and unsafe or unsound practices that involve dishonesty or "willful or continuing disregard" for a bank's well being.
"We can confirm a D&O probe into First Republic is taking place"
Wut Mean?:
- This could result in severe penalties for the failed bank's former leaders.
- This investigation is one of three FDIC probes related to bank failures earlier this year, including Silicon Valley Bank and Signature Bank, which cost the deposit insurance fund about $32 billion.
- The FDIC is examining whether First Republic's executives and board members violated fiduciary duties or engaged in unsafe practices, with the possibility of imposing industry bans and fines.
- The U.S. Justice Department and Securities and Exchange Commission (SEC) are also looking into stock trades and statements made by First Republic prior to its collapse, alongside other federal and state-level investigations.
- First Republic Bank failed in May and was sold to JPMorgan Chase & Co after being vulnerable due to excessive reliance on uninsured deposits, rapid growth with concentrated loans and funding, and inadequate planning for interest rate hikes.
