Former SVB head banned from banks
The FDIC has ordered that Sean Cutting, former president and CEO of Sonoma Valley Bank, be prohibited from ever working at a bank or other financial institution again. The order, issued at the end of December, went into effect immediately.
Cutting was also fined $10,000, payable to the U.S. Treasury.
Cutting could not be reached for comment.
The order states that Cutting “engaged or participated in violations, reckless unsafe or unsound banking practices and breaches of fiduciary duty as an institution-affiliated party of Sonoma Valley Bank,” and that his “pattern of misconduct” demonstrated a “willful or continuing disregard for the safety or soundness of the bank.”
Brian Melland, a loan officer at the bank, received a similar order of prohibition and was fined $2,500.
A representative from the FDIC said the agency had no comment on the decision other than say that the order “speaks for itself.”
Cutting started at Sonoma Valley Bank in 2002 as chief lending officer, and served as CEO beginning in February 2009 until the government seizure.
Cutting found work with Rabobank, not long after the collapse of Sonoma Valley Bank, serving as senior relationship manager at the Sonoma branch of Rabobank when it opened in January 2011.
A spokesperson for Rabobank had little to say about Cutting’s tenure except to report he left Rabobank more than a year ago, though he would not say under what circumstances Cutting might have left.
In late August 2010, the FDIC seized control of the collapsing bank in the face of hemorrhaging losses, and accusations of fraud and mismanagement. Compounding the offenses, Sonoma Valley Bank had received $8.7 million in government bailout money from the Troubled Asset Relief Program (TARP) in February 2009, and was later investigated for misusing the funds in a Congressional investigation. Sonoma Valley Bank was one of only a few banks in the country to fail after getting a TARP infusion.
It’s estimated the federal government lost more than $20 million as a result of the bank’s failing.
The U.S. Attorney in San Francisco convened with the IRS and FBI to gather evidence for a U.S. District Court grand jury in San Francisco in the summer of 2011, but no criminal charges have ever been filed.
Jack Gillund, spokesperson for the U.S. Department of Justice, said he could “neither confirm nor deny” any ongoing U.S. Attorney’s office criminal investigation into misconduct at Sonoma Valley Bank.
Many Sonoma Valley residents were affected by the bank’s collapse, not least of them the bank’s shareholders.
The stock fell from $31 a share in the fall of 2007 to being essentially valueless at less than a penny a share at the time the FDIC acted. This represented approximately $70 million in losses according to lawsuits.
Former shareholders in the bank have filed two separate class-action lawsuits against the bank. One, filed by Sonoma attorney Newton Dal Poggetto on behalf of shareholders, directly cited Cuttings in the complaint, saying the CEO was “most directly responsible for the imprudent loan activity that destroyed the bank.”