2013 FDIC Lawsuit Filings Already Exceeding Levels in Prior Years
Author:
Susan Wittner
Location: New York
Date: 2013-09-17
This year’s Federal Deposit Insurance Corporation litigation activity associated with failed financial institutions is already exceeding that of the previous three years. According to Characteristics of FDIC Lawsuits against Directors and Officers of Failed Financial Institutions—September 2013, a new report by Cornerstone Research, the FDIC has filed at least 32 D&O lawsuits as of August 8, 2013, compared with annual totals of 26 in 2012, 16 in 2011, and two in 2010. “Of the institutions that failed in 2009 and 2010—the peak years of the FDIC’s seizures—the directors and officers of nearly one third have been sued or negotiated settlements with the FDIC prior to the filing of a lawsuit. We expect this will increase as the year progresses.” This year’s increase in lawsuits stems from financial institution failures between the third quarter of 2009 and the third quarter of 2010, when failures were most common. Of the 32 lawsuits filed so far in 2013, nine were against institutions that failed in 2009 and the remaining 23 were against institutions that failed in 2010. Additional lawsuits are expected to be filed through the rest of the year, given the three-year statute of limitations for tort lawsuits and the likely existence of tolling agreements allowing the FDIC additional time to determine if it will file a lawsuit. “As expected, the FDIC’s filing of D&O lawsuits has picked up this year,” said Katie Galley, a senior vice president of Cornerstone Research and one of the report’s authors. “Of the institutions that failed in 2009 and 2010—the peak years of the FDIC’s seizures—the directors and officers of nearly one third have been sued or negotiated settlements with the FDIC prior to the filing of a lawsuit. We expect this will increase as the year progresses.” Key Findings:
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