Code Section Group

Financial Code - FIN

DIVISION 1. FINANCIAL INSTITUTIONS [99 - 819]

  ( Division 1 repealed and added by Stats. 2011, Ch. 243, Sec. 2. )

CHAPTER 6. Enforcement [550 - 595]

  ( Chapter 6 added by Stats. 2011, Ch. 243, Sec. 2. )

ARTICLE 4. Suspension or Removal of Subject Persons [585 - 589]
  ( Article 4 added by Stats. 2011, Ch. 243, Sec. 2. )

585.
  

If, after notice and an opportunity to be heard, the commissioner finds that any of the factors set forth in subdivision (a), any of the factors set forth in subdivision (b), and any of the factors set forth in subdivision (c) are true with respect to a subject person of a subject institution or holding company, the commissioner may issue an order suspending or removing the subject person from the subject person’s office, if any, with the subject institution or holding company, and prohibiting the subject person from participating in any manner in the conduct of the affairs of the subject institution or holding company without the approval of the commissioner:

(a) (1) That the subject person has, directly or indirectly, violated, or has caused a subject institution to violate, any provision of any:

(A) Division subject to the jurisdiction of the commissioner.

(B) Regulation promulgated by, or subject to the jurisdiction of, the commissioner.

(C) Other applicable law.

(D) Order issued by the commissioner or under the commissioner’s authority.

(E) Written agreement between the subject institution, subject person, or holding company and the commissioner.

(2) That the subject person has, directly or indirectly, engaged or participated in any unsafe or unsound act in connection with the business of the subject institution, holding company, or any other business institution.

(3) That the subject person has, directly or indirectly, engaged or participated in any act that constitutes a breach of the subject person’s fiduciary duty.

(b) That, by reason of the act, violation, or breach of fiduciary duty described in subdivision (a):

(1) The subject institution, holding company, or business institution has suffered or will probably suffer financial loss or other harm.

(2) The rights or interests of the customers or members of the subject institution have been or could be prejudiced.

(3) The subject person has received financial gain or other benefit.

(c) That the act, violation, or breach of fiduciary duty described in subdivision (a) either involves dishonesty on the part of the subject person or demonstrates the subject person’s willful or continuing disregard for the safety or soundness of the subject institution, holding company, or business institution.

(Added by Stats. 2011, Ch. 243, Sec. 2. Effective January 1, 2012.)

586.
  

If the commissioner finds that any of the factors set forth in subdivision (a) of Section 585, any of the factors set forth in subdivision (b) of Section 585, and any of the factors set forth in subdivision (c) of Section 585 are true with respect to a subject person of a subject institution, and that it is necessary or advisable for the protection of the subject institution or holding company, or the rights or interests of the customers or members of the subject institution, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending the subject person from the subject person’s office, if any, with the subject institution or holding company, and prohibiting the subject person from participating in any manner in the conduct of the affairs of the subject institution or holding company without the prior approval of the commissioner.

(Added by Stats. 2011, Ch. 243, Sec. 2. Effective January 1, 2012.)

587.
  

(a) If the commissioner finds that any of the factors set forth in paragraph (1) and the factor set forth in paragraph (2) are true with respect to a subject person or former subject person of a subject institution or holding company, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending the subject person or former subject person from his or her office, if any, with the subject institution or holding company and prohibiting him or her from further participating in any manner in the conduct of the affairs of the subject institution or holding company without the approval of the commissioner:

(1) That the subject person or former subject person has been charged in an indictment issued by a grand jury or in an information, complaint, or similar pleading issued by a United States attorney, district attorney, or other governmental official or agency authorized to prosecute crimes, with commission of or participation in any of the following:

(A) A crime that involves dishonesty or breach of trust and that is punishable by imprisonment for a term exceeding one year.

(B) A criminal violation of any provision of this division.

(C) A criminal violation of Section 1956, 1957, or 1960 of Title 18 of, or Section 5322 or 5324 of Title 31 of, the United States Code.

(D) A criminal violation of a law of any jurisdiction other than the United States that is substantially similar to any of the statutes specified in subparagraph (C).

(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the rights or interests of the customers or members of the subject institution or may threaten to impair public confidence in the subject institution.

(b) An order issued pursuant to subdivision (a) shall remain in effect until the indictment or the information, complaint, or similar pleading is finally disposed of or, if the order is earlier terminated by the commissioner, until the order is so terminated.

(c) If the commissioner finds that the factors set forth in paragraphs (1) and (2) are true with respect to a subject person or former subject person of a subject institution or holding company, the commissioner may, without any prior notice or opportunity to be heard, issue an order suspending or removing the subject person or former subject person from his or her office, if any, with the subject institution or holding company and prohibiting him or her from further participating in any manner in the affairs of the subject institution or holding company without the approval of the commissioner:

(1) That the subject person or former subject person has been finally convicted of any crime of the type described in paragraph (1) of subdivision (a). For purposes of this paragraph, an agreement to enter a pretrial diversion or similar program is deemed to be a conviction.

(2) That continued or resumed service or participation by the subject person or former subject person may pose a threat to the interests of the customers of the subject institution or may threaten to impair public confidence in the subject institution.

(d) The fact that any subject person of a subject institution charged with a crime of the type described in paragraph (1) of subdivision (a) is not finally convicted of the crime does not preclude the commissioner from issuing an order regarding the subject person pursuant to any other provision of this article.

(Added by Stats. 2011, Ch. 243, Sec. 2. Effective January 1, 2012.)

588.
  

(a) Any subject institution, subject person of a subject institution, or former subject person of a subject institution to whom an order is issued under Sections 585 to 587, inclusive, may apply to the commissioner to modify or rescind the order. In deciding whether to grant or deny the application, the commissioner shall consider whether it is in the public interest to modify or rescind the order and whether it is reasonable to believe that the subject person or former subject person will, if and when he or she becomes a subject person of a subject institution or holding company, comply with all applicable provisions of law, or any regulation or order issued by the commissioner.

(b) The right of any subject person or former subject person of a subject institution or holding company to whom an order is issued under Sections 585 to 587, inclusive, to petition for judicial review of the order shall not be affected by the failure of the subject institution or holding company to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.

(Added by Stats. 2011, Ch. 243, Sec. 2. Effective January 1, 2012.)

589.
  

(a) In this section, “subject financial institution” means any:

(1) Licensee or any bank or credit union that maintains an office in this state.

(2) Affiliate of any of the institutions specified in paragraph (1).

(3) Subsidiary of any of the institutions specified in paragraph (1).

(4) Holding company of any of the institutions specified in paragraph (1).

(b) It is unlawful for any subject person or former subject person of a subject financial institution to whom an order is issued under Sections 585 to 587, inclusive, willfully to do, directly or indirectly, any of the following without the approval of the commissioner, so long as the order is in effect:

(1) Act as a subject person of any subject financial institution.

(2) Vote any shares or other securities having voting rights for the election of any person as a director of a subject financial institution.

(3) Solicit, procure, transfer or attempt to transfer, or vote any proxy, consent, or authorization with respect to any shares or other securities of a subject financial institution having voting rights.

(4) Otherwise to participate in any manner in the affairs of any subject financial institution.

(Amended by Stats. 2013, Ch. 334, Sec. 27. Effective January 1, 2014.)

FINFinancial Code - FIN4.