37 THE NAFCU JOURNAL May–June 2023 “Sometimes, even credit union officials find themselves individually entangled with an adversarial proceeding involving the credit union and a third party. Federally-insured credit unions have the option to choose to indemnify its officials, but that protection comes with some limitations.” An official commits an egregious violation when he or she violates a member’s fundamental rights and “where the decision giving rise to the claim for indemnification is determined by a court to have constituted gross negligence, recklessness or willful misconduct. Matters affecting the fundamental rights and interests of federal credit union members include charter and share insurance conversions and terminations.” An example of these bad acts may include bribery. In practice, if a credit union official is sued or found guilty in court for accepting bribes in return for an improperly influenced business decision, the federal credit union cannot pay the court costs and fees per NCUA regulations. Be aware that state laws may forbid indemnification for certain bad acts of federal credit union officials or employees. Credit unions that have purchased indemnification insurance may not be fully covered by these policies. It is important for a credit union to consult trusted counsel to help determine which state laws or insurance policy provisions limit indemnification. In conclusion, board members may want to familiarize themselves with the credit union’s bylaw language or any insurance policy concerning indemnification to determine the extent they are covered. AI Oasis Website: ai-oasis.com...................................19 Allied Solutions Website: alliedsolutions.net...................... 33 DefenseStorm Website: crriq.defensestorm.com............. 18 Franklin Madison Website: franklin-madison.com.................. 11 Gallagher Website: nafcu.org/gallagher..................... 4 Index to Advertisers Mastercard Website: mastercard.us.............................. 29 NAFCU Nation Website: nafcu.org/nafcunation............. C3 Origence Website: origence.com............................... C2 Pentegra Website: pentegra.com............................... 24 Personetics Website: personetics.com/express.......... 17 Q2 Website: q2.com........................................... C4 Strategic Resource Management Website: srmcorp.com................................. 25 TruStage Website: cunamutual.com/life.................... 7 Upstart Website: upstart.com.................................... 15
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