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Enforcement actions.

The Federal Reserve Board, on November 21, 2003, announced the issuance of a final decision and order of prohibition against Garfield C. Brown, Jr., a former employee of Mellon Bank, N.A., Pittsburgh, Pennsylvania. The order, the result of an action brought by the Office of the Comptroller of the Currency, prohibits Mr. Brown from participating in the conduct of the affairs of any financial institution or holding company.

The Federal Reserve Board, on November 26, 2003, announced the issuance of a consent order of assessment of a civil money penalty against The Bank of Currituck, Moyock, North Carolina, a state member bank. The Bank of Currituck, without admitting to any allegations, consented to the issuance of the order in connection with its alleged violations of the Board's Regulations implementing the National Flood Insurance Act.

The order requires The Bank of Currituck to pay a civil money penalty of $16,000, which will be remitted to the Federal Emergency Management Agency for deposit into the National Flood Mitigation Fund.

The Federal Reserve Board, on November 26, 2003, announced the issuance of a consent order of assessment of a civil money penalty against the Provident Bank, Cincinnati, Ohio, a state member bank. Provident Bank, without admitting to any allegations, consented to the issuance of the order in connection with its alleged violations of the Board's Regulations implementing the National Flood Insurance Act.

The order requires Provident Bank to pay a civil money penalty of $34,100, which will be remitted to the Federal Emergency Management Agency for deposit into the National Flood Mitigation Fund.

The Federal Reserve Board, on December 1, 2003, announced the execution of a written agreement by and among the Putnam County Bank, Hurricane, West Virginia; the West Virginia Division of Banking, Charlestown, West Virginia; and the Federal Reserve Bank of Richmond.

The Federal Reserve Board, on December 18, 2003, announced the issuance of several enforcement actions involving Credit Lyonnais, S.A., a large French bank with several U.S. offices. The actions relate primarily to Credit Lyonnais's participation in the rehabilitation of the Executive Life Insurance Company of California, which was declared insolvent in 1991. The Federal Reserve's actions included the following:

* A civil money penalty of $100 million against Credit Lyonnais issued

by consent.

* A consent cease and desist order against Credit Lyonnais designed to prevent future violations of the Bank Holding Company Act.

* Initiation of a formal enforcement action against Jean Peyrelevade, the former chairman and chief executive officer of Credit Lyonnais, seeking to prohibit him from the U.S. banking industry, and assessing a $500,000 civil money penalty against him. Peyrelevade will have an opportunity to answer the charges and request a hearing before an administrative law judge.

* A written agreement between Credit Agricole, the parent of Credit Lyonnais, and the Federal Reserve Bank of New York in which Credit Agricole agrees to comply with the restrictions in the Credit Lyonnais cease and desist order. Credit Agricole, which acquired Credit Lyonnais in June 2003, had no part in the conduct that led to these enforcement actions.

In addition to the Federal Reserve's actions, the U.S. attorney in Los Angeles is announcing that Credit Lyonnais and several other entities and individuals have agreed to plead guilty to specific crimes related to their roles in the Executive Life matter, as well as announcing an indictment against several other individuals involved in the matter, including Peyrelevade. The Federal Reserve Board and the Federal Reserve Bank of New York investigated the matter jointly with the U.S. Attorney's Office. The consent enforcement actions being announced by the Federal Reserve are part of a global accord designed to address both the regulatory and criminal aspects of the Executive Life matter.

The Federal Reserve is also working with the French banking supervisor to take joint action to require Credit Lyonnais and its parent to enhance their overall compliance programs. Completion of the documentation for this action is expected shortly.

The Federal Reserve's consent action against Credit Lyonnais resolves allegations that, beginning in the early 1990s, Credit Lyonnais violated the Bank Holding Company Act by acquiring the company that assumed Executive Life's insurance underwriting business through secret agreements that were concealed from the Federal Reserve. The action also resolves allegations that Credit Lyonnais intentionally misrepresented to the Federal Reserve the extent of its ownership interests in a portfolio of junk bonds that had been acquired from Executive Life, as well as its substantial equity investment and other relationships with Artemis, S.A., a French company that subsequently acquired the successor insurance company and junk bond portfolio. In the Board's order, Credit Lyonnais neither admits nor denies these allegations.

The notice of charges issued against Peyrelevade, who became the chief executive officer of Credit Lyonnais after the acquisition of the insurance business, alleges that he took steps to further the alleged violations, engaged in unsafe and unsound practices in not reporting the violations when he learned about them, and made false statements to Federal Reserve investigators about the scope of his knowledge of the secret acquisition.

The Federal Reserve Board, on December 24, 2003, announced the execution of a written agreement by and among Combanc, Delphos, Ohio; The Commercial Bank, Delphos, Ohio; the Ohio Division of Financial Institutions, Columbus, Ohio; and the Federal Reserve Bank of Cleveland.

The Federal Reserve Board, on January 8, 2004, announced the issuance, together with the Commission Bancaire, the regulator of French banks, of a consent enforcement action against Credit Lyonnais, S.A., a large French bank, and Credit Agricole, S.A., its parent company.

This action is the third one agreed to by Credit Lyonnais and its parent with respect to Credit Lyonnais's participation in the rehabilitation of the Executive Life Insurance Company of California. The Federal Reserve was working with the French banking regulator on this joint action when the other enforcement actions were announced on December 18, 2003. The other actions, among other things, require specific remedial actions to address concerns arising out of the Executive Life matter.

The January 8 action by the Federal Reserve and the Commission Bancaire requires that Credit Lyonnais and Credit Agricole, as Credit Lyonnais's parent, establish programs designed to ensure their overall compliance with applicable U.S. banking and financial laws, rules, and regulations. Credit Lyonnais and Credit Agricole are also required to enhance their general organizational infrastructure, as well as policies and procedures, with respect to compliance with U.S. laws and regulations, subject to the oversight of the Commission Bancaire and the Federal Reserve Board.

Credit Agricole, which acquired Credit Lyonnais in June 2003, had no part in the conduct that led to this enforcement action.

The Federal Reserve Board, on January 9, 2004, announced the issuance of an order of prohibition and an order to cease and desist against Scott Smolinski, a former vice president of the James Monroe Bank, Arlington, Virginia.

Mr. Smolinski, without admitting to any allegations, consented to the issuance of the order based on his alleged participation in violations of law and unsafe or unsound practices regarding identity theft, falsification of bank records, misapplication of bank funds, self-dealing, and violations of institutional internal controls that resulted in losses and other damage to the bank and personal gain to Mr. Smolinski.
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Title Annotation:Announcements
Publication:Federal Reserve Bulletin
Geographic Code:1USA
Date:Dec 22, 2004
Words:1211
Previous Article:Publication of the December 2003 update to the Bank Holding Company Supervision Manual.
Next Article:Changes in board staff.
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