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P brought an enforcement action against D, the former CEO of a Michigan-based community bank, for mismanaging one of the bank’s loan relationships in the wake of the “Great Recession” of 2007-2009. Under §8(e) of the (FDIA), as amended by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, the FDIC may remove and prohibit individuals from working in the banking sector if certain conditions are met. The FDIC must determine that an individual committed misconduct. That occurs when, as relevant here, the individual has “engaged or participated in any unsafe or unsound practice,” or breached his “fiduciary duty.” The FDIC must find that a bank or its depositors were harmed, or that the individual personally benefited, “by reason of ” the individual’s misconduct. Finally, the individual’s misconduct must “involv[e] personal dishonesty” or “demonstrat[e] willful or continuing disregard . . . for the safety or soundness” of the bank. D served as CEO of Northwestern Bank, The Bank developed a lending relationship with the Nielson Entities, a group of 19 family-owned businesses that operate in the real estate and oil industries. In 2009, the lending relationship-by then, the Bank’s biggest-began to sour. On September 1 of that year, facing financial difficulties due to the Great Recession, the Entities stopped paying their loans outright. At the time, they owed the Bank $38 million. The parties reached a multistep agreement known as the Bedrock Transaction to bring all of the Entities’ loans current. But on September 1, 2010, the Entities again stopped making their loan payments. Another short-term agreement was reached. But in January 2011, the Entities once more stopped making their loan payments. They have remained in default. P opened an investigation. P issued a notice of intention to remove D as well as two other Bank executives from office, and to prohibit them from further participation in the banking industry. The agency also issued a notice of assessment of civil penalties. P claimed D had violated §1818(e), and mishandled the Nielson Entities lending relationship in various ways: The Bedrock Transaction failed to comply with the Bank’s internal loan policy; the Bank’s board of directors was misled or misinformed of the nature of the Transaction; D failed to respond accurately to FDIC inquiries about the Transaction; and the Transaction was misreported on the Bank’s financial statements. An FDIC ALJ began a 7-day evidentiary hearing into D’s conduct. Petitioner was among one of 12 witnesses who testified. The ALJ issued his written decision, recommending that D be barred from the banking industry and be assessed a $125,000 civil penalty. The Board held that “the record in this matter overwhelmingly establishes that D engaged in numerous unsafe or unsound practices.” The Board concluded that an individual “need not be the proximate cause of the harm to be held liable under section 8(e).” It found that D had caused the Bank to charge off (i.e., forgive) $30,000 of one of the loans made in the Bedrock Transaction; it suffered $6.4 million in losses on other Nielson Loans; and it incurred investigative, auditing, and legal expenses in managing the Bedrock Transaction and its fallout. It found that D “persistently concealed . . . the true common nature of the Nielson Entities Loan portfolio, [and] problems with that portfolio.” It found that D “falsely answered questions presented to him during examinations,” “concealed documents showing the true condition of the loans,” and “falsely testified that Board members had been fully apprised of the nature of the Nielson Loan portfolio.” P imposed its penalty and D appealed. On appeal, the court affirmed two errors in P’s holding. The Sixth Circuit then affirmed P’s decision concluding that substantial evidence supported the Board’s sanctions determination, even though the Board never applied the proximate cause standard itself or considered whether the sanctions against Calcutt were warranted on the narrower set of harms that the Sixth Circuit identified. The Supreme Court granted certiorari.

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