The Rundown

• NCUA charges former CEO with breach of duty and gross negligence.
• The agency says that Addison initiated "drastic changes" at Texans CU.
• Regulator claims that Addition hid investment risks from the CU's board.

The NCUA filed suit late last month against David Addison, former CEO of Texans Credit Union, accusing him of breach of fiduciary duty and gross negligence that led to the $1.4 billion credit union's April 2011 conservatorship.

The complaint, filed in U.S. District court in Dallas, alleges that the credit union's failure resulted from Addison's ill-advised decision to acquire financial services firm OBS Holdings Inc. and other investments. Almost immediately upon being named CEO in 2003, Addison "began making drastic changes to the credit union, changing longstanding internal policies and fundamentally shifting its overall business focus," the suit said. The credit union's strategy shifted from traditional credit union services to investments in "several risky businesses and commercial loan participations" not typically associated with credit unions, the NCUA said.

Addison ignored warnings that TCU's purchase of OBS was not only impermissible under Texas law but also exposed the credit union to an extraordinary level of risk. Addison hid that risk from TCU's board to gain approval for the purchase, the lawsuit claims.