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Financial Services Law Insights and Observations

OCC announces settlements with former senior executives over account openings

Federal Issues OCC Incentive Compensation Settlement Civil Money Penalties

Federal Issues

On September 21, the OCC announced settlements with three former senior executives of a national bank for their roles in the bank’s incentive compensation sales practices. According to consent orders (see here and here), the OCC alleged that two of the individuals either “knew or should have known” about the sales misconduct problem and its root cause, but allegedly failed to, among other things, appropriately consider concerns about the “unreasonably high sales goals” and the associated risks of incentivizing sales of secondary deposit products. The third individual—previously in charge of identifying human resource risks—allegedly approved incentive compensation plans that overly incentivized sales and failed to respond to or escalate information received about unreasonable sales goals. In addition to paying civil money penalties, the individuals—who did not admit or deny wrongdoing—have each agreed to cooperate with the OCC in any investigation, litigation, or administrative proceeding related to sales misconduct at the bank.

As previously covered by InfoBytes, in January, the OCC reached settlements with three other former senior executives in January for their alleged roles in the bank’s sales practices misconduct, and issued notices of charges against five others.