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FDIC Enforcement Decisions and Orders

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   [10,116] In the Matter of Bank of Stamford, Stamford, Connecticut, Docket No. FDIC-90-150c&b (9-19-90).

   Bank to cease and desist from such practices as approving, purchasing, granting, making, committing to or funding any loan or other extension of credit or rewriting any existing loan or other extension of credit to named parties in violation of Regulation O; permitting certain interested directors from participating in the discussions or decisions regarding any transactions involving specifically named parties; and altering, destroying or removing from the Bank's premises any existing credit files, loan documentation, collateral documentation, promissory notes, or accounting information relating to any transactions which involve specifically named parties. (This order was terminated by order of the FDIC dated 5-13-92; see ¶ 15,445.)

   [.1] Extension of Credit—Regulation O—Report
   [.2] Shareholders—Disclosure—Cease and Desist Order

In the Matter of

BANK OF STAMFORD
STAMFORD, CONNECTICUT
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-90-150c&b

   The Federal Deposit Insurance Corporation ("FDIC") on August 6, 1990, issued to Bank of Stamford, Stamford, Connecticut ("Bank") a NOTICE OF CHARGES AND OF HEARING ("NOTICE") under section 8(b)(1) of the Federal Deposit Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1). The NOTICE charged the Bank with having engaging in unsafe or unsound banking practices and advised the Bank of its right to a hearing on such charges under section 8(b)(1) of the Act, 12 U.S.C. § 1818(b)(1).
   The Bank and counsel for the FDIC thereafter executed a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT"), dated September 18, 1990, whereby solely for the purpose of this proceeding and without admitting or denying any of the allegations in the NOTICE, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the FDIC.
   The FDIC considered the matter and determined that it had reason to believe that the Bank had engaged in unsafe or unsound banking practices. The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

ORDER TO CEASE AND DESIST

   IT IS HEREBY ORDERED, that the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank, cease and desist from the following unsafe or unsound banking practices:
   (a) approving, purchasing, granting, making, committing to or funding any loan or other extension of credit, as defined in section 215.3 of Federal Reserve Regulation O, 12 C.F.R. § 215.3, or rewriting any existing loan or other extension of credit, to Richard D. Barbieri, Sr., John A. Corpaci, Vinal S. Duncan, or Richard D. Barbieri, Jr., or any current executive officer(s) or director(s) of Security Savings and Loan Association, Waterbury, Connecticut ("Security"), or to their related interests as defined in section 215.2 of Federal Reserve Regulation O, 12 C.F.R. § 215.2, unless the loan or other extension of credit does not involve more than the normal risk of repayment or present other unfavorable features and has been approved in advance by a majority of the Bank's entire Board of Directors;
   (b) approving, purchasing, granting, making, committing to or funding any loan or other extension of credit, as defined in section 215.3 of Federal Reserve Regulation O, 12 C.F.R. § 215.3, or rewriting any existing loan or other extension of credit, to any person or entity who or which has been referred to the
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   Bank by Richard D. Barbieri, Sr., John A. Corpaci, Vinal S. Duncan, or Richard D. Barbieri, Jr., or any current executive officer(s) or director(s) of Security, or to their related interest (as defined in section 215.2 of Federal Reserve Regulation O, 12 C.F.R. §215.2) of any person or entity who or which has been so referred, unless the loan or other extension of credit does not involve more than the normal risk of repayment or present other unfavorable features and has been approved in advance by a majority of the Bank's entire Board of Directors;

       (c) approving, purchasing, granting, making, committing to or funding any loan or other extension of credit, as defined in section 215.3 of Federal Reserve Regulation O, 12 C.F.R. § 215.3, or rewriting any existing loan or other extension of credit, to any person or entity knowing the proceeds of such loan or other extension of credit will be used for the tangible economic benefit of, or will be transferred to, any party to whom paragraphs (a) and/or (b) of this ORDER apply, unless the loan or other extension of credit does not involve more than the normal risk of repayment or present other unfavorable features and has been approved in advance by a majority of the Bank's entire Board of Directors;
       (d) permitting any director and/or officer of the bank who as of August 3, 1990 had outstanding credit from Security, directly or indirectly, or through his/ her related interest(s) (as defined in section 215.2 of Federal Reserve Regulation O, 12 C.F.R. § 215.2) in excess of one-hundred-sixty-five thousand dollars ($165,000) from participating in the discussions which involve any party to whom paragraphs (a), (b) and/or (c) of this ORDER apply. Nothing herein, however, prohibits any individual(s) to whom this paragraph (d) applies from providing factual information to the Bank or its agents in response to any inquiries from the Bank or its agents;
       (e) altering, destroying or removing from the Bank's premises any existing credit files, loan documentation, collateral documentation, promissory notes, or accounting information relating to any transaction which involve any party to whom paragraphs (a), (b) and/or (c) of this ORDER apply.
   Nothing in this ORDER shall be construed to prevent the Bank from honoring binding and legally enforceable obligations existing before August 8, 1990.
   IT IS FURTHER ORDERED, that the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank, take affirmative action as follows:

   [.1] 1. They shall report the names of the principals, amounts outstanding or committed to, and internal rating grade and reason therefore, of all investment or credit extension transaction between the Bank and any party to whom paragraphs (a), (b), and/or (c) of this ORDER apply. The reports will be submitted to the Regional Director of the FDIC's Boston Regional Office and the Banking Commissioner of the State of Connecticut within thirty (30) days following each calendar quarter.

   [.2] 2. Following the effective date of this ORDER, the Bank shall send to its shareholders a description of this ORDER, (1) in conjunction with the Bank's next shareholder communication, and also (2) in conjunction with its notice or proxy statement preceding the Bank's next shareholder meeting. The description shall fully describe the ORDER in all material respects. The description and any accompanying communication, statement, or notice shall be sent to the FDIC, Registration and Disclosure Section, Washington, D.C. 20429, for review at least twenty (20) days prior to dissemination to shareholders. Any changes requested to be made by the FDIC shall be made prior to dissemination of the description, communication, notice, or statement.
   This ORDER shall become effective ten (10) days from the date of its issuance.
   The provisions of this ORDER shall be binding upon the Bank, its directors, officers, employees, agents, successors, assigns, and other persons participating in the conduct of the affairs of the Bank.
   The provisions of this ORDER shall remain effective and enforceable except to the extent that, until such time as, any provisions of this ORDER shall have been modified, terminated suspended, or set aside by the FDIC.
   Pursuant to delegated authority.
   Dated at Needham, Massachusetts this 19th day of September, 1990.

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