Sunday, July 26, 2015


The shareholder class action suit, filed against the Bancorp Bank, and two of its senior officers, its CEO and CFO, could be the shape of things to come. Should senior management be held liable for AML/BSA deficiencies, when they are not disclosed to stockholders ? A regulatory Consent Order issued on June 5, 2014, caused by rampant BSA compliance deficiencies, most likely caused the bank's stock to tumble from a high of $21.00 per share, to today's $8.75; No wonder the shareholders are angry. They are alleging materially false and misleading statements, and material omissions, were made by Bancorp, a publicly traded company.

We note that 80% of the bank's securities are owned by institutional investors, specifically pension & retirement plans, for teachers, labor groups and police organizations. Many of those interested parties have moved to be appointed as lead plaintiff, and for approval of selection of counsel. The action, which was filed last year in US District Court in Delaware, where the bank's holding company, The Bancorp, Inc., is domiciled, is not yet at issue.

The fact that the bank had an ineffective AML compliance program, and had a close relationship with anonymous prepaid card distributor, Transact Network Limited, of Gibraltar, were well known in compliance circles. Your writer was contacted by Bancorp officers, after providing training to another financial institution in the area, and I personally discussed my concerns with Bancorp senior compliance officials, several months prior to the issuance of the Consent Order, but my warnings fell on deaf ears, as management arrogantly denied that there were any AML problems.

We shall be monitoring all filings in this case, and shall be reporting back on all significant developments, as it is of interest to all in the compliance industry.


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