• Directive on Confidentiality of Bank Supervisory Information
  • February 11, 2013 | Author: Katharine F. Musso
  • Law Firm: Jones Walker LLP - Birmingham Office
  • Alabama Banking Department Superintendent John D. Harrison recently issued a directive to Alabama banks and their bank holding companies outlining supervisory expectations about maintaining confidentiality of exam reports, board responses, and other "confidential supervisory information." The Superintendent cited several recent court cases in which the Alabama Banking Department struggled to enforce the confidentiality of supervisory information, notwithstanding express statutory protection. The new requirements apply to bank internal and external communications and communications to or from the Department that reference examination or investigation information, including materials generated in exams conducted jointly with federal bank regulators. Banks and bank holding companies are obligated to adopt formal written procedures identifying "confidential supervisory information." First, if an Alabama bank (or its holding company or any of its affiliates) receives a subpoena requesting confidential supervisory information, the Alabama Banking Department’s general counsel is to be contacted immediately. Banks are warned not to rely on confidentiality or claw back provisions to protect information in litigation. Second, if an Alabama Banking Department representative attends a bank meeting, any comments made by that person concerning the affairs of the bank must be marked as "confidential supervisory information." Similarly, board meetings in which examination findings are discussed should be similarly identified. Subsequent communications from the Alabama Banking Department have suggested that these board proceedings should be conducted in executive session.

    Lawyers and accountants are permitted access to a bank’s confidential supervisory information by Alabama law. The directive obligates banks to verify that their lawyers and accountants have adopted their own policies to protect confidential supervisory information.

    While applicable only to Alabama banks, the directive serves as a cautionary reminder about the need to protect regulatory materials. Considering the scope of potential locations for regulatory materials—including e-mails on handheld devices, flash drives, and copy machine scanner memories—it is a good idea to revisit the adequacy of current practices.