Bank directors and officers may be held to a different standard of care from the directors and officers of other business corporations, leaving their actions without the protection of the business judgment rule, according to a recent and highly unusual decision from a Georgia federal court.
On Dec. 4, 2009, the Buckhead Community Bank failed. The FDIC took over as a receiver and subsequently filed suit against nine former directors and officers of the bank. In its complaint, the FDIC charged that the defendants were negligent and grossly negligent in their management of the bank's loan portfolio, leading to the failure.
This article also appeared in the February 2014 issue of The Bank Board Letter.
Read the article here.