Prohibited Indemnification Payment Law and Legal Definition
According to 12 CFR 359.1 [Title 12 -- Banks and Banking; Chapter III -- Federal Deposit Insurance Corporation; Subchapter B -- Regulations and Statements of General Policy; Part 359 -- Golden Parachute and Indemnification Payments], prohibited indemnification payment means “any payment (or any agreement or arrangement to make any payment) by any insured depository institution or an affiliated depository institution holding company for the benefit of any person who is or was an IAP of such insured depository institution or holding company, to pay or reimburse such person for any civil money penalty or judgment resulting from any administrative or civil action instituted by any federal banking agency, or any other liability or legal expense with regard to any administrative proceeding or civil action instituted by any federal banking agency which results in a final order or settlement pursuant to which such person:
(i) Is assessed a civil money penalty;
(ii) Is removed from office or prohibited from participating in the conduct of the affairs of the insured depository institution; or
(iii) Is required to cease and desist from or take any affirmative action described in section 8(b) of the Act with respect to such institution.””
