Banking and Finance Law Daily Fed fines Wintrust Financial $1.125M for internal control deficiencies
Friday, March 1, 2019

Fed fines Wintrust Financial $1.125M for internal control deficiencies

By Charles A. Menke, J.D.

Wintrust Financial has agreed to pay the Fed a civil money penalty of over $1 million for engaging in unsafe or unsound practices due to internal control deficiencies at Hinsdale Bank, a wholly-owned subsidiary.

The Federal Reserve Board has imposed a $1,012,500 civil money penalty against Wintrust Financial Corporation, a bank holding company based in Rosemont, Ill., stemming from improper accounting practices dating back to 2008 that occurred at Hinsdale Bank & Trust, a state-member bank owned and controlled by Wintrust. The penalty was imposed pursuant to a Consent Order of Assessment entered into between the Fed and Wintrust.

According to the order, an internal audit by Wintrust revealed that the then-CFO of Hinsdale failed to perform a daily reconciliation of a loan-related general ledger account and that the account had an unreconciled balance exceeding $2 million. Wintrust failed to investigate or address the unreconciled balance until March 2015, at which time it identified and reported the issue.

Internal control deficiencies. Wintrust also suffered from additional internal control deficiencies from approximately 2010 through 2015, the order states. These deficiencies represented or resulted in unsafe or unsound practices warranting the imposition of a civil money penalty, and included: a failure to adequately supervise staff; a lack of segregation duties; and a lack of policies and procedures. As a result, Hinsdale’s then-CFO was able to engage in improper accounting practices in an attempt to conceal the unreconciled balance until March 2015, causing Wintrust to suffer a $2.7 million loss.

Additional action. The terms of the order do not bar, estop, or otherwise prevent the Fed, or any other federal or state agency or department, from taking any other action affecting Wintrust. However, the Fed is prohibited from taking any additional action against Wintrust on any matters concerning or arising from the matters addressed by the order based upon facts presently known by the Fed.

Companies: Hinsdale Bank & Trust; Wintrust Financial Corporation

MainStory: TopStory BankingOperations DirectorsOfficersEmployers EnforcementActions FederalReserveSystem IllinoisNews

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