CEO Disbarment in Court Ruling Draws Scrutiny
The power of regulators to bar individuals from serving in a credit union once they have left their former employer has come in for new focus this week with a Pennsylvania appellate court barring the ex-CEO of the $119 million Boeing Helicopters CU from rejoining a CU.
The Commonwealth Court of Pennsylvania in Harrisburg in upholding a 2009 order by the Department of Banking regarding John Galante, who had been terminated by Boeing, held that the enforcement power of regulators would be hindered by overturning the order.
Galante in a series of court challenges over the years contended the department lacked jurisdiction to ban him from future jobs since he had left the Ridley Park, Pa., credit union in January 2009.
The court opinion, written by Judge P. Kevin Brobson argued that “there can be no question” the state agency has jurisdiction to determine whether people should be prohibited from working in CUs after they have exited from their positions.
“If the regulator does not have authority over ex-credit union employees, then all a CEO has to do to avoid sanction is to resign right before the regulator’s action,” said the court.
A spokeswoman for NCUA declined comment on the ruling since it is “dealing largely with a state action,”
The current president/CEO of Boeing Helicopters CU, Philip Travaglini, also declined comment.