Ronald Paul, who abruptly stepped down as chairman and CEO of Eagle Bancorp in Bethesda, Md., in 2019, has been barred from the banking industry.
The Federal Reserve also fined Paul $90,000 after the former executive agreed to resolve claims he and the $10.9 billion-asset Eagle made negligently false and misleading statements about related-party loans tied to his business interests.
EagleBank agreed to pay a $9.5 million fine for violating the Fed’s insider lending regulations.
Separately, Eagle agreed to pay disgorgement of $2.6 million, prejudgment interest of $750,493 and a $10 million civil penalty to address claims by the Securities and Exchange Commission.
Paul, in his arrangement with the SEC, agreed to pay disgorgement of $109,000, prejudgment interest of $22,216 and a $300,000 penalty.
Eagle and Paul reached the agreements without admitting or denying wrongdoing.
The SEC, in a complaint filed in U.S. District Court for the Southern District of New York, alleged that Eagle, from March 2015 to April 2018, failed to include loans to Paul’s family trusts – totaling at times nearly $90 million – in the related-party loan balances included in its annual reports and proxy statements.
The commission’s order found that Eagle improperly omitted tens of millions of dollars of loans to company directors and their family members from these related-party loan balances.
Finally, the order determined that, after a December 2017 report asserting Eagle had made significant undisclosed loans to Paul’s family trusts, the company and its CEO falsely stated in press releases, news articles and investor meetings that the loans were not related-party loans.
“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’s enforcement division, said in the release. “Faced with a short seller’s report alleging undisclosed related party loans by the bank, both Eagle and Paul failed to respond truthfully and accurately.”