Bill Text: TX HB3555 | 2015-2016 | 84th Legislature | Comm Sub
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Relating to certain administrative procedures and enforcement authority relating to state banks, state trust companies, and bank holding companies.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2015-06-10 - Effective on 9/1/15 [HB3555 Detail]
Download: Texas-2015-HB3555-Comm_Sub.html
Bill Title: Relating to certain administrative procedures and enforcement authority relating to state banks, state trust companies, and bank holding companies.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2015-06-10 - Effective on 9/1/15 [HB3555 Detail]
Download: Texas-2015-HB3555-Comm_Sub.html
By: Parker (Senate Sponsor - Eltife) | H.B. No. 3555 | |
(In the Senate - Received from the House May 4, 2015; | ||
May 4, 2015, read first time and referred to Committee on Business | ||
and Commerce; May 12, 2015, reported favorably by the following | ||
vote: Yeas 7, Nays 0; May 12, 2015, sent to printer.) | ||
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relating to certain administrative procedures and enforcement | ||
authority relating to state banks, state trust companies, and bank | ||
holding companies. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. The heading to Section 31.201, Finance Code, is | ||
amended to read as follows: | ||
Sec. 31.201. BANKING COMMISSIONER HEARING; INFORMAL | ||
DISPOSITION. | ||
SECTION 2. Section 31.201, Finance Code, is amended by | ||
adding Subsection (d) to read as follows: | ||
(d) The banking commissioner may informally dispose of a | ||
matter within the jurisdiction of and before the banking | ||
commissioner by consent order, agreed settlement, or default. | ||
SECTION 3. Subchapter A, Chapter 35, Finance Code, is | ||
amended by adding Section 35.0001 to read as follows: | ||
Sec. 35.0001. APPLICABILITY TO BANK SUBSIDIARIES. This | ||
subchapter applies to a subsidiary of a state bank, a present or | ||
former officer, director, or employee of a subsidiary, or a | ||
controlling shareholder or other person participating in the | ||
affairs of a subsidiary in the same manner as the subchapter applies | ||
to a state bank, a present or former officer, director, or employee | ||
of a state bank, or a controlling shareholder or other person | ||
participating in the affairs of a state bank. | ||
SECTION 4. Section 35.002, Finance Code, is amended by | ||
adding Subsection (b-1) to read as follows: | ||
(b-1) A proposed cease and desist order may require an | ||
officer, employee, or director of a state bank, or the bank itself | ||
acting through an authorized person, to cease or desist from a | ||
violation or other practice or to take affirmative action to | ||
correct the conditions resulting from a violation or other | ||
practice, including the payment of restitution or other action that | ||
the banking commissioner determines is appropriate. | ||
SECTION 5. Subchapter A, Chapter 35, Finance Code, is | ||
amended by adding Section 35.0035 to read as follows: | ||
Sec. 35.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO | ||
CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a | ||
person is considered to have been finally convicted of an offense if | ||
the person's case is not subject to further appellate review and: | ||
(1) a sentence was imposed on the person; | ||
(2) the person received probation or community | ||
supervision, including deferred adjudication community | ||
supervision; or | ||
(3) the court deferred final disposition of the | ||
person's case. | ||
(b) The banking commissioner has grounds to remove or | ||
prohibit a present or former officer, director, or employee of a | ||
state bank from office or employment in, or prohibit a controlling | ||
shareholder or other person participating in the affairs of a state | ||
bank from further participation in the affairs of, a state bank or | ||
any other entity chartered, registered, permitted, or licensed by | ||
the banking commissioner if the person has been finally convicted | ||
of a felony offense involving: | ||
(1) a bank or other financial institution; | ||
(2) dishonesty; or | ||
(3) breach of trust. | ||
(c) If the banking commissioner has grounds for action under | ||
Subsection (b), the banking commissioner may serve a removal or | ||
prohibition order, as appropriate, on the person who has been | ||
finally convicted of a felony offense. The banking commissioner | ||
shall also serve a copy of the order on any state bank that the | ||
person is affiliated with at the time of service of the order. | ||
(d) An order issued under this section becomes effective | ||
immediately on service and continues in effect unless the order is: | ||
(1) stayed or terminated by the banking commissioner; | ||
(2) set aside by the banking commissioner after a | ||
hearing; or | ||
(3) stayed or vacated on appeal. | ||
(e) Not later than the 30th day after the date an order is | ||
served under this section, the person against whom the order is | ||
issued may request in writing a hearing before the banking | ||
commissioner to show that the person's continued service to a state | ||
bank or participation in the affairs of a state bank does not, or is | ||
unlikely to, threaten the interests of the depositors, creditors, | ||
or shareholders of the state bank or the public confidence in the | ||
state bank. | ||
(f) Not later than the 30th day after the date the request | ||
for a hearing is received under this section, the banking | ||
commissioner shall hold the hearing, unless the party requesting | ||
the hearing requests a later date. At the hearing, the party | ||
requesting the hearing has the burden of proof. | ||
(g) After the hearing, the banking commissioner may affirm, | ||
modify, or set aside, in whole or in part, the order. An order | ||
affirming or modifying the order is immediately final for purposes | ||
of enforcement and appeal. The order may be appealed as provided by | ||
Sections 31.202, 31.203, and 31.204. | ||
SECTION 6. Subchapter B, Chapter 35, Finance Code, is | ||
amended by adding Section 35.1001 to read as follows: | ||
Sec. 35.1001. APPLICABILITY TO BANK SUBSIDIARIES. This | ||
subchapter applies to a subsidiary of a state bank, a present or | ||
former officer, director, or employee of a subsidiary, or a | ||
controlling shareholder or other person participating in the | ||
affairs of a subsidiary in the same manner as the subchapter applies | ||
to a state bank, a present or former officer, director, or employee | ||
of a state bank, or a controlling shareholder or other person | ||
participating in the affairs of a state bank. | ||
SECTION 7. The heading to Section 181.201, Finance Code, is | ||
amended to read as follows: | ||
Sec. 181.201. BANKING COMMISSIONER HEARING; INFORMAL | ||
DISPOSITION. | ||
SECTION 8. Section 181.201, Finance Code, is amended by | ||
adding Subsection (d) to read as follows: | ||
(d) The banking commissioner may informally dispose of a | ||
matter within the jurisdiction of and before the banking | ||
commissioner by consent order, agreed settlement, or default. | ||
SECTION 9. Subchapter A, Chapter 185, Finance Code, is | ||
amended by adding Section 185.0001 to read as follows: | ||
Sec. 185.0001. APPLICABILITY TO STATE TRUST COMPANY | ||
SUBSIDIARIES. This subchapter applies to a subsidiary of a state | ||
trust company, a present or former officer, director, manager, | ||
managing participant, or employee of a subsidiary, or a controlling | ||
shareholder or other person participating in the affairs of a | ||
subsidiary in the same manner as the subchapter applies to a state | ||
trust company, a present or former officer, director, manager, | ||
managing participant, or employee of a state trust company, or a | ||
controlling shareholder or other person participating in the | ||
affairs of a state trust company. | ||
SECTION 10. Section 185.002, Finance Code, is amended by | ||
adding Subsection (b-1) to read as follows: | ||
(b-1) A proposed cease and desist order may require an | ||
officer, employee, director, manager, or managing participant of a | ||
state trust company, or the state trust company itself acting | ||
through an authorized person, to cease or desist from a violation or | ||
other practice or to take affirmative action to correct the | ||
conditions resulting from a violation or other practice, including | ||
the payment of restitution or other action that the banking | ||
commissioner determines is appropriate. | ||
SECTION 11. Section 185.003(a), Finance Code, is amended to | ||
read as follows: | ||
(a) The banking commissioner has grounds to remove or | ||
prohibit a present or former officer, director, manager, managing | ||
participant, or employee of a state trust company from office or | ||
employment in, or prohibit a controlling shareholder or participant | ||
or other person participating in the affairs of a state trust | ||
company from further participation in the affairs of, the state | ||
trust company or any other entity chartered, registered, permitted, | ||
or licensed by the banking commissioner if the banking commissioner | ||
determines from examination or other credible evidence that: | ||
(1) the person: | ||
(A) intentionally committed or participated in | ||
the commission of an act described by Section 185.002(a) with | ||
regard to the affairs of a financial institution, as defined by | ||
Section 201.101; | ||
(B) violated a final cease and desist order | ||
issued by a state or federal regulatory agency against the person or | ||
an entity in which the person is or was an officer, director, or | ||
employee; or | ||
(C) made, or caused to be made, false entries in | ||
the records of a financial institution; | ||
(2) because of this action by the person: | ||
(A) the financial institution has suffered or | ||
will probably suffer financial loss or expense, or other damage; | ||
(B) the interests of the clients, depositors, | ||
creditors, or shareholders of the financial institution have been | ||
or could be prejudiced; or | ||
(C) the person has received financial gain or | ||
other benefit by reason of the action, or likely would have if the | ||
action had not been discovered; and | ||
(3) that action by the person: | ||
(A) involves personal dishonesty on the part of | ||
the person; or | ||
(B) demonstrates wilful or continuing disregard | ||
for the safety or soundness of the financial institution. | ||
SECTION 12. Subchapter A, Chapter 185, Finance Code, is | ||
amended by adding Section 185.0035 to read as follows: | ||
Sec. 185.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO | ||
CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a | ||
person is considered to have been finally convicted of an offense if | ||
the person's case is not subject to further appellate review and: | ||
(1) a sentence was imposed on the person; | ||
(2) the person received probation or community | ||
supervision, including deferred adjudication community | ||
supervision; or | ||
(3) the court deferred final disposition of the | ||
person's case. | ||
(b) The banking commissioner has grounds to remove or | ||
prohibit a present or former officer, director, manager, managing | ||
participant, or employee of a state trust company from office or | ||
employment in, or prohibit a controlling shareholder or participant | ||
or other person participating in the affairs of a state trust | ||
company from further participation in the affairs of, the state | ||
trust company or any other entity chartered, registered, permitted, | ||
or licensed by the banking commissioner if the person has been | ||
finally convicted of a felony offense involving: | ||
(1) a financial institution, as defined by Section | ||
201.101; | ||
(2) dishonesty; or | ||
(3) breach of trust. | ||
(c) If the banking commissioner has grounds for action under | ||
Subsection (b), the banking commissioner may serve a removal or | ||
prohibition order, as appropriate, on the person who has been | ||
finally convicted of a felony offense. The banking commissioner | ||
shall also serve a copy of the order on any state trust company that | ||
the person is affiliated with at the time of service of the order. | ||
(d) An order issued under this section becomes effective | ||
immediately on service and continues in effect unless the order is: | ||
(1) stayed or terminated by the banking commissioner; | ||
(2) set aside by the banking commissioner after a | ||
hearing; or | ||
(3) stayed or vacated on appeal. | ||
(e) Not later than the 30th day after the date an order is | ||
served under this section, the person against whom the order is | ||
issued may request in writing a hearing before the banking | ||
commissioner to show that the person's continued service to a state | ||
trust company or participation in the affairs of a state trust | ||
company does not, or is unlikely to, threaten the interests of the | ||
clients, depositors, creditors, or shareholders of the state trust | ||
company or the public confidence in the state trust company. | ||
(f) Not later than the 30th day after the date a request for | ||
a hearing is received under this section, the banking commissioner | ||
shall hold the hearing, unless the party requesting the hearing | ||
requests a later date. At the hearing, the party requesting the | ||
hearing has the burden of proof. | ||
(g) After the hearing, the banking commissioner may affirm, | ||
modify, or set aside, in whole or in part, the order. An order | ||
affirming or modifying the order is immediately final for purposes | ||
of enforcement and appeal. The order may be appealed as provided by | ||
Sections 181.202, 181.203, and 181.204. | ||
SECTION 13. Subchapter B, Chapter 185, Finance Code, is | ||
amended by adding Section 185.1001 to read as follows: | ||
Sec. 185.1001. APPLICABILITY TO STATE TRUST COMPANY | ||
SUBSIDIARIES. This subchapter applies to a subsidiary of a state | ||
trust company, a present or former officer, director, manager, | ||
managing participant, or employee of a subsidiary, or a controlling | ||
shareholder or other person participating in the affairs of a | ||
subsidiary in the same manner as the subchapter applies to a state | ||
trust company, a present or former officer, director, manager, | ||
managing participant, or employee of a state trust company, or a | ||
controlling shareholder or other person participating in the | ||
affairs of a state trust company. | ||
SECTION 14. Section 202.005, Finance Code, is amended by | ||
adding Subsection (a-1) to read as follows: | ||
(a-1) The grounds, procedures, and effects of an | ||
enforcement proceeding brought under this section apply to a bank | ||
holding company, an officer, director, or employee of a bank | ||
holding company, or a controlling shareholder or other person | ||
participating in the affairs of a bank holding company in the same | ||
manner as the grounds, procedures, and effects apply to a state | ||
bank, an officer, director, or employee of a state bank, or a | ||
controlling shareholder or other person participating in the | ||
affairs of a state bank. | ||
SECTION 15. This Act takes effect September 1, 2015. | ||
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