Mark DeFazio, the company's president and CEO, borrowed the funds two months ago at a fixed interest rate of 5.7%, the company said in
Separately in 2021, DeFazio borrowed $780,000 from the New York City-based company at a 2.1% interest rate, and Metropolitan has determined that loan was likely impermissible, too, according to the filing. DeFazio has fully repaid that earlier loan in connection with an April 26 agreement to rescind the March 2023 loan, the filing said.
Metropolitan, the holding company for Metropolitan Commercial Bank, said that it reevaluated the two loans to DeFazio in connection with the preparation of its annual proxy statement. It determined that both loans were likely not permitted under applicable law, applicable regulations or both.
After reviewing the filing, Dave Nasatir, chairman of the law firm Obermayer and chair of its business and finance department, theorized that the bank might have violated part of Regulation O, which governs how credit is extended to insiders at banks.
"My gut says they triggered something," he said. "Regulation O is very detailed on giving loans to any senior officers of a company. The rules are so tough that the overwhelming majority of bank executives seek financing outside of their institutions."
Bloomberg reported a
"I suspect [Metropolitan] took a second look because they're uneasy at the scrutiny they could be getting," Nasatir said. "Everyone is trying to scrub themselves clean."
Metropolitan did not respond to a request for comment.
Under their agreement, Metropolitan and its CEO agreed that payments made on the March 2023 loan would be returned and that any dividends DeFazio received relating to the shares he purchased would be repaid.
DeFazio has served Metropolitan's president since the company's inception in 1999, and as its CEO since 2002. Last year, his compensation totaled $4.6 million, up 5% from the previous year.
Metropolitan
