2 ex-Allfirst officials barred from banking


April 25, 2006

Two former executives of Baltimore's Allfirst Financial Inc. were barred from the banking industry by the Federal Reserve yesterday over $691 million in currency losses discovered in 2002.

Former Treasurer David Cronin and Robert Ray, the one-time senior vice president of treasury funds management, were prohibited from "participating in any manner" with an insured depository institution, bank or savings association holding company, the Fed said in separate orders yesterday.

The losses prompted Allied Irish, Allfirst's parent, to sell the bank to M&T Bank Corp. in 2003. John Rusnak, the foreign currency trader who hid the currency losses, pleaded guilty to defrauding Allfirst and was sentenced to seven years in prison in January 2003.

Allied Irish fired Cronin and Ray, along with four others, in March 2002, after the losses came to light.

In the orders yesterday, the Fed said it won't take any action against Cronin or Ray related to their alleged participation in "unsafe and unsound practices" in connection with their supervision of Rusnak.

The Federal Reserve said the orders did not constitute admissions of guilt by Ray or Cronin. The agreements are "solely for the purpose of settlement of this proceeding without protracted or extended hearing or testimony," according to the orders.

The losses at Allfirst were the largest attributed to unauthorized trading since Sumitomo Corp. lost $2.6 billion in copper trades in 1996 and trader Nick Leeson lost $1.4 billion from Britain's Barings PLC bank in 1995.

Cronin's lawyer, Stuart Stein of the Washington office of Hogan & Hartson, declined to comment. J. Sedwick Sollers, a lawyer for Ray at the Washington office of King & Spalding, didn't return a call seeking comment made after business hours.

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