On August 22, 2011, the FDIC sued 17 former directors and officers of Silverton Bank (“Silverton”), as well as two of Silverton’s D&O insurers. A copy of the complaint can be found here. Silverton is the tenth failed bank D&O suit filed by the FDIC since July 2010. The FDIC reports that more such suits are in the pipeline: “[a]s of August 4, 2011, the FDIC has authorized suits in connection with 30 failed institutions against 266 individuals for D&O liability with damage claims of at least $6.8 billion.”
The Silverton suit, venued in the Northern District of Georgia, is notable because the complaint directly addresses the “Insured versus Insured” and “Regulatory” exclusions found in Silverton’s D&O policies. Please click here for a discussion of how these exclusions bear on the FDIC’s ability to access a failed bank’s D&O insurance program. Silverton presents an additional wrinkle in that the "Regulatory" exclusion was included in the binder on the primary policy, but was apparently inadvertently left off the policy at issuance. Silverton thus involves a number of compelling contract interpretation questions and further fodder for those interested in the applicability of D&O policy exclusions to claims made by the FDIC.