Directors who sit on the boards of both a thrift and its holding company may not be held to a higher standard of corporate conduct than directors who sit on a single board, a federal appeals court has ruled.

The decision by the U.S. Court of Appeals for the District of Columbia Circuit came in a case involving the Office of Thrift Supervisionand Donald M. Kaplan, the former chief economist for the agency's predecessor, the Federal Home Loan Bank Board.

The OTS sued Mr. Kaplan in 1994, charging he was responsible for $23 million in losses that American Savings and Loan Association of Miami suffered in a 1990 deal with its holding company. He served on both boards at the time.

In its Jan. 10 decision, the appeals court said the OTS has no rules requiring holding company directors to inform a thrift's board of the parent's deliberations.

The OTS had maintained that Mr. Kaplan should have informed American Savings' board ofthe holding company's plan to sell the collateral backing a loan.

The court said the agency failed to present any evidence that Mr. Kaplan knew that the holding company actually intended to sell the collateral. Rather the evidence suggests the board simply discussed a possible sale.

Mr. Kaplan "did nothing wrong in failing to raise the matter," the court said.

Mr. Kaplan did not have a special duty to convene a meeting of the thrift's board to discuss the deal, the court said, adding that the holding company's chairman, who also sat on the subsidiary's board, should have notified the thrift.

In 1992 the holding company's chairman, Harris Friedman, agreed to reimburse the thrift $700,000, and he consented to a lifetime ban from banking.

Industry lawyers applauded the ruling. "We are delighted to see the court pick up the dual-service issue and resolve it in the right way," said Michael F. Crotty, deputy general counsel for litigation at the American Bankers Association. "What the OTS did was not an acceptable way of implementing administrative law."

"The court has made very clear that there is no authority in the OTS' statutes or administrative rules for a higher level of responsibility because of dual service," agreed Arthur W. Leibold, a partner at Washington law firmDechert, Price & Rhoads.

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