Bill Text: NY S05465 | 2011-2012 | General Assembly | Introduced
Bill Title: Relates to penalties for certain violations of laws or regulations by banking entities.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-01-04 - REFERRED TO BANKS [S05465 Detail]
Download: New_York-2011-S05465-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
5465
2011-2012 Regular Sessions
I N S E N A T E
May 24, 2011
___________
Introduced by Sen. GRIFFO -- (at request of the Banking Department) --
read twice and ordered printed, and when printed to be committed to
the Committee on Banks
AN ACT to amend the banking law, in relation to the penalties imposed on
individuals for violating or causing a violation of laws or regu-
lations by banking entities; and to repeal section 41 of such law
relating thereto
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Section 41 of the banking law is REPEALED and a new section
2 41 is added to read as follows:
3 S 41. REMOVAL, PROHIBITION AND CIVIL MONETARY PENALTIES FOR CERTAIN
4 VIOLATIONS. 1. GROUNDS FOR ENFORCEMENT ACTION. FOR PURPOSES OF THIS
5 SECTION, GROUNDS FOR COMMENCEMENT OF AN ENFORCEMENT ACTION SHALL EXIST
6 WHERE THE SUPERINTENDENT HAS REASON TO BELIEVE THAT ANY DIRECTOR, TRUS-
7 TEE, OFFICER, MEMBER OR PARTNER, OR, IN THE CASE OF A FOREIGN BANKING
8 CORPORATION, THE PERSON IN CHARGE, OR AN OFFICER, OF A BRANCH OR AGENCY
9 (FOR PURPOSES OF THIS SECTION, EACH A "COVERED INDIVIDUAL"), OF ANY
10 BANKING ORGANIZATION, ANY BANK HOLDING COMPANY (AS SUCH TERM IS DEFINED
11 IN ARTICLE THREE-A OF THIS CHAPTER), OR ANY FOREIGN BANKING CORPORATION
12 (FOR PURPOSES OF THIS SECTION, EACH A "COVERED ENTITY");
13 (A) HAS VIOLATED OR CAUSED OR PERMITTED SUCH COVERED ENTITY TO
14 VIOLATE:
15 (I) ANY LAW OR ANY REGULATION DULY ENACTED UNDER THIS CHAPTER RELATING
16 TO SUCH COVERED ENTITY,
17 (II) ANY ORDER ISSUED BY THE SUPERINTENDENT TO SUCH COVERED ENTITY TO
18 CEASE CONDUCTING BUSINESS IN AN UNAUTHORIZED OR UNSAFE AND UNSOUND
19 MANNER, OR
20 (III) ANY WRITTEN AGREEMENT BETWEEN SUCH COVERED ENTITY AND THE SUPER-
21 INTENDENT; OR
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD09734-03-1
S. 5465 2
1 (B) HAS CONTINUED TO ENGAGE OR PARTICIPATE IN ANY UNAUTHORIZED OR
2 UNSAFE PRACTICE IN CONDUCTING THE BUSINESS OF SUCH COVERED ENTITY AFTER
3 HAVING BEEN ORDERED OR WARNED BY THE SUPERINTENDENT TO DISCONTINUE SUCH
4 PRACTICE.
5 2. NOTICE OF HEARING. WHERE THE SUPERINTENDENT BELIEVES THERE ARE
6 GROUNDS FOR AN ENFORCEMENT ACTION AGAINST A COVERED INDIVIDUAL, AS SET
7 FORTH IN SUBDIVISION ONE OF THIS SECTION, THE SUPERINTENDENT MAY, IN HIS
8 OR HER DISCRETION, CAUSE TO BE SERVED UPON SUCH COVERED INDIVIDUAL,
9 EITHER PERSONALLY OR, UPON A FINDING THAT SUCH INDIVIDUAL CANNOT BE
10 SERVED PERSONALLY WITHIN THE STATE, BY REGISTERED MAIL AT HIS OR HER
11 ADDRESS LAST KNOWN TO THE SUPERINTENDENT, A STATEMENT OF THE CHARGES
12 AGAINST SUCH COVERED INDIVIDUAL AND NOTICE OF AN OPPORTUNITY TO APPEAR
13 BEFORE THE SUPERINTENDENT TO SHOW CAUSE WHY HE OR SHE SHOULD NOT BE
14 SUBJECT TO ONE OR MORE OF THE FOLLOWING PENALTIES (INDIVIDUALLY AND
15 JOINTLY REFERRED TO IN THIS SECTION AS AN "AVAILABLE PENALTY"):
16 (A) REMOVAL FROM OFFICE, EMPLOYMENT OR THE PERFORMANCE OF ANY FURTHER
17 CONTRACTUAL SERVICES WITH THE COVERED ENTITY;
18 (B) PROHIBITION FROM PARTICIPATION, IN ANY MANNER, IN THE CONDUCT OF
19 THE AFFAIRS OF ANY COVERED ENTITY; OR
20 (C) FORFEITURE AND PAYMENT FOR EACH DAY SUCH VIOLATION OR VIOLATIONS
21 HAVE CONTINUED OF A CIVIL MONETARY PENALTY DETERMINED IN ACCORDANCE WITH
22 SUBDIVISION SIX OF THIS SECTION.
23 3. HEARING. SUCH NOTICE OF OPPORTUNITY FOR A HEARING SHALL FIX A TIME
24 AND PLACE AT WHICH THE HEARING MAY BE HELD. ANY SUCH HEARING SHALL BE
25 NOTICED, CONDUCTED AND ADMINISTERED BEFORE AN INDEPENDENT HEARING OFFI-
26 CER IN COMPLIANCE WITH THE STATE ADMINISTRATIVE PROCEDURE ACT AND THE
27 RULES AND PROCEDURES OF THE DEPARTMENT. IF SUCH COVERED INDIVIDUAL SHALL
28 WAIVE A HEARING OR SHALL FAIL TO APPEAR IN PERSON OR BY A DULY AUTHOR-
29 IZED REPRESENTATIVE WITHOUT GOOD CAUSE SHOWN, SUCH INDIVIDUAL SHALL BE
30 DEEMED TO HAVE CONSENTED TO THE ISSUANCE OF AN ORDER IMPOSING ONE OR
31 MORE OF THE AVAILABLE PENALTIES.
32 4. SUSPENSION PENDING DETERMINATION OF CHARGES. UPON OR AT ANY TIME
33 AFTER SERVICE OF WRITTEN NOTICE PURSUANT TO SUBDIVISION TWO OF THIS
34 SECTION TO ANY COVERED INDIVIDUAL, THE SUPERINTENDENT MAY SUSPEND SUCH
35 INDIVIDUAL FROM OFFICE OR PROHIBIT SUCH INDIVIDUAL FROM PARTICIPATING IN
36 ANY MANNER IN THE CONDUCT OF THE AFFAIRS OF ANY COVERED ENTITY. ANY
37 SUSPENSION ORDER SO ISSUED SHALL BECOME EFFECTIVE UPON SERVICE AND,
38 UNLESS AMENDED OR RESCINDED BY THE SUPERINTENDENT, SHALL REMAIN IN
39 EFFECT AND ENFORCEABLE UNTIL LIFTED BY THE SUPERINTENDENT OR REPLACED BY
40 AN ORDER ISSUED PURSUANT TO SUBDIVISION FIVE OF THIS SECTION.
41 5. DETERMINATION BY SUPERINTENDENT. FOLLOWING RECEIPT OF FINDINGS OF
42 FACT AND CONCLUSIONS OF LAW FROM THE INDEPENDENT HEARING OFFICER
43 CONDUCTING A HEARING HELD IN ACCORDANCE WITH SUBDIVISION THREE OF THIS
44 SECTION, OR A WAIVER OF, OR FAILURE WITHOUT GOOD CAUSE TO APPEAR AT,
45 SUCH HEARING, THE SUPERINTENDENT SHALL DETERMINE WHETHER TO DISMISS ONE
46 OR MORE OF THE CHARGES OR TO ISSUE AN ORDER IMPOSING ONE OR MORE OF THE
47 AVAILABLE PENALTIES.
48 6. CIVIL MONETARY PENALTY. THE SUPERINTENDENT MAY, PURSUANT TO SUBDI-
49 VISION FIVE OF THIS SECTION, REQUIRE ANY COVERED INDIVIDUAL TO PAY TO
50 THE PEOPLE OF THIS STATE A PENALTY DETERMINED AS FOLLOWS:
51 (A) FIRST TIER. IF THE COVERED INDIVIDUAL COMMITS ANY VIOLATION
52 DESCRIBED IN PARAGRAPH (A) OF SUBDIVISION ONE OF THIS SECTION, A CIVIL
53 PENALTY OF NOT MORE THAN $5,000 FOR EACH DAY DURING WHICH SUCH VIOLATION
54 CONTINUES.
55 (B) SECOND TIER. IF THE COVERED INDIVIDUAL COMMITS ANY VIOLATION
56 DESCRIBED IN PARAGRAPH (A) OF SUBDIVISION ONE OF THIS SECTION, AND SUCH
S. 5465 3
1 VIOLATION (I) IS PART OF A PATTERN OF MISCONDUCT, (II) CAUSES OR IS
2 LIKELY TO CAUSE MORE THAN A MINIMAL LOSS TO HIS OR HER COVERED ENTITY;
3 OR (III) RESULTS, DIRECTLY OR INDIRECTLY, IN PECUNIARY GAIN OR OTHER
4 BENEFIT TO SUCH COVERED INDIVIDUAL, A CIVIL PENALTY OF NOT MORE THAN
5 $25,000 FOR EACH DAY DURING WHICH SUCH VIOLATION CONTINUES.
6 (C) THIRD TIER. IF THE COVERED INDIVIDUAL KNOWINGLY OR RECKLESSLY
7 COMMITS ANY VIOLATION DESCRIBED IN PARAGRAPH (A) OF SUBDIVISION ONE OF
8 THIS SECTION, AND SUCH VIOLATION CAUSES OR IS LIKELY TO CAUSE A SIGNIF-
9 ICANT LOSS TO HIS OR HER COVERED ENTITY OR RESULTS, DIRECTLY OR INDI-
10 RECTLY, IN A SUBSTANTIAL PECUNIARY GAIN OR OTHER BENEFIT TO SUCH COVERED
11 INDIVIDUAL, A CIVIL PENALTY IN AN AMOUNT NOT TO EXCEED $1,000,000 FOR
12 EACH DAY DURING WHICH SUCH VIOLATION, PRACTICE, OR BREACH CONTINUES.
13 7. EFFECT OF ORDER FOR REMOVAL, PROHIBITION OR MONETARY PENALTIES.
14 SERVICE OF A COPY OF AN ORDER OF REMOVAL OR PROHIBITION OR ORDER IMPOS-
15 ING MONETARY PENALTIES UPON A COVERED INDIVIDUAL SHALL BE MADE EITHER
16 PERSONALLY OR BY REGISTERED MAIL AT THE ADDRESS OF SUCH PERSON LAST
17 KNOWN TO THE SUPERINTENDENT, AND, IN THE CASE OF AN ORDER OF REMOVAL OR
18 PROHIBITION, UPON THE COVERED ENTITY OF WHICH HE OR SHE IS A DIRECTOR,
19 TRUSTEE, OFFICER, MEMBER OR PARTNER OR, IN THE CASE OF A PERSON IN
20 CHARGE OR AN OFFICER OF A BRANCH OR AGENCY OF A FOREIGN BANKING CORPO-
21 RATION, UPON SUCH FOREIGN BANKING CORPORATION. UPON SUCH SERVICE, IN THE
22 CASE OF AN ORDER OF REMOVAL OR PROHIBITION, SUCH COVERED INDIVIDUAL
23 SHALL CEASE TO BE A DIRECTOR, TRUSTEE, OFFICER, MEMBER OR PARTNER OF THE
24 RELEVANT BANKING ENTITY OR THE PERSON IN CHARGE OF, OR OFFICER OF, A
25 BRANCH OR AGENCY OF A FOREIGN BANKING CORPORATION, AND, IN THE CASE OF
26 AN ORDER IMPOSING MONETARY PENALTIES, SUCH INDIVIDUAL SHALL CAUSE TO BE
27 PAID ANY AMOUNTS OWED TO THE DEPARTMENT UNDER SUCH ORDER WITHIN SIXTY
28 DAYS OF THE DATE OF SUCH SERVICE. ANY COVERED INDIVIDUAL SO REMOVED
29 FROM OFFICE, EMPLOYMENT, OR SUCH CONTRACTUAL ARRANGEMENT WITH A COVERED
30 ENTITY WHO THEREAFTER WITHOUT PERMISSION OF THE SUPERINTENDENT PARTIC-
31 IPATES IN ANY MANNER IN THE MANAGEMENT OF, EMPLOYMENT IN OR ANY CONTRAC-
32 TUAL ARRANGEMENT WITH SUCH ENTITY SHALL BE GUILTY OF A MISDEMEANOR.
33 8. MANNER OF REVIEW. THE SUPERINTENDENT SHALL FILE ONE COPY OF ANY
34 ORDER ISSUED UNDER THIS SECTION IN THE OFFICE OF THE DEPARTMENT. SUCH
35 ORDER MAY BE REVIEWED IN THE MANNER PROVIDED BY ARTICLE SEVENTY-EIGHT OF
36 THE CIVIL PRACTICE LAW AND RULES. SUCH SPECIAL PROCEEDING FOR REVIEW
37 MUST BE COMMENCED WITHIN THIRTY DAYS FROM THE DATE OF SUCH ORDER.
38 S 2. This act shall take effect immediately.
