Hi all,

I was wondering, if a bank hires a consultant to set-up a Regulation D reserve management program, is the consultant also liable for the program if it is not compliant with Regulation D. In other words, could the consultant indemnify the bank against any losses resulting in noncompliance with Reg. D?

Thank you!

You might get them to sign such a document, but is it worth much?

I guess that's the question at hand. Is it general practice to include an indemnity clause when a bank purchases a reserve management program/software from the consultant? If so, has anyone ever encountered an instance where the program did not perform has represented, thus causing the bank to violate Regulation D and then having the bank enforce the indemnity clause against the consultant. Any related experiences or insight would be greatly appreciated. Thanks!

You would probably find that the program is working correctly, but the information input is invalid. System changes or the exported report layout issues. This calls into point need for validation & not just poking in the numbers.

Enforcing an indemnity clause is a long and costly process. Ultimately the bank is responsible for compliance. You should do your due diligence on the product up front and be confident the program is in compliance. Then once it's implemented, monitor the output for compliance.