§ 18438 Loan Violation Personal Liability

• •If a loan or purchase breaks certain rules (Sections 18271-18274 or 18437), the people in charge can be held responsible.
• •This includes bosses, directors, and owners of the company.
• •They have to pay for any money the company loses because of the bad loan or purchase.
• •This rule applies to the company, its parent company, and any related companies.

A bank gives a huge loan to a friend of the boss without checking if they can pay it back, which is against the rules.

If the friend can't pay the loan back and the bank loses money, the boss and other leaders who knew about it have to pay the bank back for the loss.