Enforcement actions

Federal Reserve Bulletin, Winter, 2004

The notice of charges issued against Peyrelevade, who became the chief executive officer of Credit Lyonnais after the acquisition of the insurance business, alleges that he took steps to further the alleged violations, engaged in unsafe and unsound practices in not reporting the violations when he learned about them, and made false statements to Federal Reserve investigators about the scope of his knowledge of the secret acquisition.

The Federal Reserve Board, on December 24, 2003, announced the execution of a written agreement by and among Combanc, Delphos, Ohio; The Commercial Bank, Delphos, Ohio; the Ohio Division of Financial Institutions, Columbus, Ohio; and the Federal Reserve Bank of Cleveland.

The Federal Reserve Board, on January 8, 2004, announced the issuance, together with the Commission Bancaire, the regulator of French banks, of a consent enforcement action against Credit Lyonnais, S.A., a large French bank, and Credit Agricole, S.A., its parent company.

This action is the third one agreed to by Credit Lyonnais and its parent with respect to Credit Lyonnais's participation in the rehabilitation of the Executive Life Insurance Company of California. The Federal Reserve was working with the French banking regulator on this joint action when the other enforcement actions were announced on December 18, 2003. The other actions, among other things, require specific remedial actions to address concerns arising out of the Executive Life matter.

The January 8 action by the Federal Reserve and the Commission Bancaire requires that Credit Lyonnais and Credit Agricole, as Credit Lyonnais's parent, establish programs designed to ensure their overall compliance with applicable U.S. banking and financial laws, rules, and regulations. Credit Lyonnais and Credit Agricole are also required to enhance their general organizational infrastructure, as well as policies and procedures, with respect to compliance with U.S. laws and regulations, subject to the oversight of the Commission Bancaire and the Federal Reserve Board.

Credit Agricole, which acquired Credit Lyonnais in June 2003, had no part in the conduct that led to this enforcement action.

The Federal Reserve Board, on January 9, 2004, announced the issuance of an order of prohibition and an order to cease and desist against Scott Smolinski, a former vice president of the James Monroe Bank, Arlington, Virginia.

Mr. Smolinski, without admitting to any allegations, consented to the issuance of the order based on his alleged participation in violations of law and unsafe or unsound practices regarding identity theft, falsification of bank records, misapplication of bank funds, self-dealing, and violations of institutional internal controls that resulted in losses and other damage to the bank and personal gain to Mr. Smolinski.