Taylor Capital (TAYC) in Chicago has been notified by the Federal Reserve Board that its bank is facing an enforcement action for employing deceptive trade practices.

The $5.7 billion-asset company disclosed in a regulatory filing Wednesday that the Fed concluded that Cole Taylor Bank for violating a section of the Federal Trade Commission Act. The bank was flagged for a checking account opening process tied to a relationship with an former business partner that provides various services to the higher education industry.

Taylor said it faces up to $3.6 million in civil money penalties and that it could also be forced to make restitution to account holders impacted by the violation, though the amount of restitution is unknown. Management "is presently unable to reasonably estimate... whether any such amount would have a material impact on" the company's financials, the filing added.

Taylor said the unnamed business partner would be obligated to reimburse Cole Taylor for any restitution it pays because of a contractual indemnification agreement. However, the filing raised concerns that the unnamed firm would be able to "fully honor its commitment."

Taylor's issues are believed to be tied to a relationship it established in April 2012 with Higher One, a group that provides electronic financial-aid disbursements and payment services. There have also been concerns that this infraction could delay Taylor's sale to MB Financial (MBFI).

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