Bill protecting bank directors gets committee approval

[private]Legislation that would make it harder to sue corporate officers and directors for their business decisions — HB 192 —  was unanimously approved Wednesday by the Senate Banking and Financial Institutions Committee.

HB 192, which has already passed the House, may soon be headed for vote by the full Senate.

The bill was prompted by a successful FDIC lawsuit against the directors of the Buckhead Community Bank, which was closed by regulators in 2009.  In the course of that trial, the Georgia Supreme Court ruled that bank officers and directors can be held legally accountable if they make negligent decisions that cause the financial institution to fail.

A federal trial jury subsequently found the directors liable for $4.9 million in damages for their role in the bank’s failure.

That Supreme Court decision “impacts our ability to recruit officers and directors for banks,” state banking Commissioner Kevin Hagler told the committee.

HB 192, introduced by Rep. Beth Beskin (R-Atlanta), originally provided that bank directors and officers could only be sued for gross negligence, not for negligence, for the decisions they made. The bill has since been revised to include all corporate officers and directors.

“Corporations need this protection too, absolutely,” Beskin said.

In its original form, HB 192 was opposed by the Georgia Trial Lawyers Association. The organization’s lobbyist, Bill Clark, did not testify against the bill at Wednesday’s hearing.

“We still believe that the bill is not needed and not in the best interest of Georgia investors and Georgia depositors,” Clark said in an email.

“However, after working with the House Judiciary Committee to eliminate the most egregious parts of the bill so as to preserve most of the current legal protections for Georgia shareholders and bank depositors, we are pleased that the Senate Banking Committee agreed not to change the bill back to the troubling form in which it was originally introduced,” he added.

© 2017 by The Georgia Report


Tags: bank directors , Beth Beskin , Bill Clark , legal liability