Two former CEOs have been banned from working again for corporates but are allowed to work elsewhere in the industry, including at natural person credit unions.
The NCUA issued cease and desist orders Friday that prohibit former U.S. Central FCU President/CEO Francis Lee and former Members United Corporate FCU President/CEO Joseph Herbst from working at, consulting with or advising for, any federally insured corporate credit union. Lee and Herbst are both also prohibited from selling investment securities to corporates.
However, the NCUA did not bar either from federally insured credit unions in general. Herbst is currently employed as senior vice president and chief strategic officer at the $2.3 billion Affinity Federal Credit Union in Basking Ridge, N.J.
Affinity FCU President/CEO John Fenton served as chairman of the Members United board from 2008 until it was seized in 2010. Herbst did not answer a call to his extension at Affinity FCU, and calls to Affinity's media representatives were not answered, and a voice mail was not returned by press time.
The announcement follows Thursday's similar announcement that former Western Corporate FCU Chief Investment Officer Robert Burrell, the executive responsible for investment strategies that caused the greatest loss in U.S. credit union history, was also banned from working with or for corporate credit unions, but not all federally insured credit unions. Burrell currently operates his own ALM advisory firm, ALM ViewPoint.
All three men were banned from corporates as a condition of legal settlement with the NCUA for suits or potential suits against them in connection with losses that led to their now-collapsed institutions being seized by the NCUA.
When asked why Burrell was banned from corporates and not all credit unions, NCUA spokesman John Zimmerman said, "Our concern with Mr. Burrell stems from his oversight of complex investments suitable for purchase by a federally insured corporate credit union."
Zimmerman cited the NCUA examiner guide as saying that cease and desist orders, as opposed to the prohibitions others have received, can be permanent or temporary, and are similar to an injunction.
"It is usually NCUA's first option when the agency needs formal action. Cease and desist is useful and effective because it allows NCUA to stop a current harmful practice or anticipate and prevent harmful practices from occurring," the guide states.
The NCUA did not specify in its release whether the cease and desist orders against the three are temporary or permanent.
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