A "covered transaction" includes "a purchase of, or investment in, a security issued by the affiliate."

My question is, if the bank purchases stock in the holding company for the purposes of an ESOP, is that a covered transaction subject to the 10% of capital restriction?

I can't imagine that it is, but can someone point me in the direction as to why it isn't?

The ESOP issue is "discussed" on Page 19 here.

Thanks, Paragon. The ESOP does not control 25% of the outstanding shares, but the trustees are members of the Board. Should I read that to mean that the transaction would be covered?

I say yes, but this is probably something that a legal eagle should nod yes or no on as look who is involved!