Seventh Circuit Grants Stay of FDIC Sanctions Against Former Bank Chairman

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Glazer $7.2B Lawsuit

The Seventh Circuit has granted an emergency stay of professional sanctions against Frank William Bonan II, the former chairman of Grand Rivers Community Bank, following his challenge to an FDIC enforcement action. Bonan alleges that the agency’s administrative proceeding violated his constitutional rights.

In a one-page order issued Friday, a three-judge panel granted Bonan’s request, filed on New Year’s Eve, to pause the FDIC’s December 17 decision barring him from the banking industry and imposing a $105,000 fine. The panel’s order noted that the FDIC did not oppose the motion but did not elaborate on its reasoning.

Constitutional Challenge to FDIC Proceedings
Bonan, represented by Thompson Coburn LLP, contends that the FDIC’s in-house proceeding violated his Seventh Amendment right to a jury trial, citing parallels with the U.S. Supreme Court’s decision in SEC v. Jarkesy. In that case, the Court curtailed the SEC’s use of administrative proceedings for enforcement actions, requiring them to be conducted in federal courts where jury trials are available. Bonan argues this precedent should extend to FDIC actions, which also involve civil penalties and regulate private transactions.