12 USC 4636 - Civil money penalties

Collapse to view only § 4636. Civil money penalties

§ 4631. Cease-and-desist proceedings
§ 4632. Temporary cease-and-desist orders
§ 4633. Hearings
§ 4634. Judicial review
§ 4635. Enforcement and jurisdiction
§ 4636. Civil money penalties
§ 4636a. Removal and prohibition authority
§ 4636b. Criminal penalty
§ 4637. Notice after separation from service
§ 4638. Private rights of action
§ 4639. Public disclosure of final orders and agreements
§ 4640. Notice of service
§ 4641. Subpoena authority
§ 4642. Reporting of fraudulent loans

§ 4631. Cease-and-desist proceedings

(a) Issuance for unsafe or unsound practices and violations

(1) Authority of Director

(2) Limitation

(b) Issuance for unsatisfactory rating

(1) Notice of charges

(2) Issuance of order

(d) Affirmative action to correct conditions resulting from violations or activitiesThe authority under this section and section 4632 of this title to issue any order requiring a regulated entity, executive officer, director, or entity-affiliated party to take affirmative action to correct or remedy any condition resulting from any practice or violation with respect to which such order is issued includes the authority to require a regulated entity or entity-affiliated party—

(1) make 1

1 So in original. Probably should be “to make”.

restitution to, or provide reimbursement, indemnification, or guarantee against loss, if—

(A) such entity or party or finance facility was unjustly enriched in connection with such practice or violation; or

(B) the violation or practice involved a reckless disregard for the law or any applicable regulations or prior order of the Director;

(2) to require a regulated entity to seek restitution, or to obtain reimbursement, indemnification, or guarantee against loss;

(3) to restrict the growth of the regulated entity;

(4) to require the regulated entity to dispose of any loan or asset involved;

(5) to require the regulated entity to rescind agreements or contracts;

(6) to require the regulated entity to employ qualified officers or employees (who may be subject to approval by the Director at the direction of the Director); and

(7) to require the regulated entity to take such other action as the Director determines appropriate.

(e) Authority to limit activities

(f) Effective date

(Pub. L. 102–550, title XIII, § 1371, Oct. 28, 1992, 106 Stat. 3986; Pub. L. 110–289, div. A, title I, § 1151, July 30, 2008, 122 Stat. 2767.)

§ 4632. Temporary cease-and-desist orders

(a) Grounds for issuance

(1) In generalIf the Director determines that the actions specified in the notice of charges served upon a regulated entity or any entity-affiliated party pursuant to section 4631(a) of this title, or the continuation thereof, is likely to cause insolvency or significant dissipation of assets or earnings of that entity, or is likely to weaken the condition of that entity prior to the completion of the proceedings conducted pursuant to sections 4631 and 4633 of this title, the Director may—

(A) issue a temporary order requiring that regulated entity or entity-affiliated party to cease and desist from any such violation or practice; and

(B) require that regulated entity or entity-affiliated party to take affirmative action to prevent or remedy such insolvency, dissipation, condition, or prejudice pending completion of such proceedings.

(2) Additional requirements

(b) Effective date

(1) Temporary orderIf a notice of charges served under section 4631(a) or (b) of this title specifies on the basis of particular facts and circumstances that the books and records of the regulated entity served are so incomplete or inaccurate that the Director is unable, through the normal supervisory process, to determine the financial condition of the regulated entity or the details or the purpose of any transaction or transactions that may have a material effect on the financial condition of that regulated entity, the Director may issue a temporary order requiring—

(A) the cessation of any activity or practice which gave rise, whether in whole or in part, to the incomplete or inaccurate state of the books or records; or

(B) affirmative action to restore the books or records to a complete and accurate state.

(2) Effective periodAny temporary order issued under paragraph (1)—

(A) shall become effective upon service; and

(B) unless set aside, limited, or suspended by a court in proceedings pursuant to subsection (d), shall remain in effect and enforceable until the earlier of—

(i) the completion of the proceeding initiated under section 4631 of this title in connection with the notice of charges; or

(ii) the date the Director determines, by examination or otherwise, that the books and records of the regulated entity are accurate and reflect the financial condition of the regulated entity.

(d) Judicial review

(e) Enforcement by Attorney General

(Pub. L. 102–550, title XIII, § 1372, Oct. 28, 1992, 106 Stat. 3988; Pub. L. 110–289, div. A, title I, § 1152, July 30, 2008, 122 Stat. 2769.)

§ 4633. Hearings

(a) Requirements

(1) Venue and record

(2) Timing

(3) Procedure

(4) Failure to appear

(b) Issuance of order

(1) In general

(2) Modification

(Pub. L. 102–550, title XIII, § 1373, Oct. 28, 1992,

§ 4634. Judicial review

(a) Commencement

(b) Filing of record

(d) Review

(e) Order to pay penalty

(f) No automatic stay

(Pub. L. 102–550, title XIII, § 1374, Oct. 28, 1992, 106 Stat. 3990; Pub. L. 110–289, div. A, title I, § 1153(b)(1)(C), July 30, 2008, 122 Stat. 2775.)

§ 4635. Enforcement and jurisdiction

(a) Enforcement

(b) Limitation on jurisdiction

(Pub. L. 102–550, title XIII, § 1375, Oct. 28, 1992, 106 Stat. 3990; Pub. L. 110–289, div. A, title I, § 1154, July 30, 2008, 122 Stat. 2775.)

§ 4636. Civil money penalties

(a) In general

(b) Amount of penalty

(1) First tierA regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $10,000 for each day during which a violation continues, if such regulated entity or party—

(A) violates any provision of this chapter, the authorizing statutes, or any order, condition, rule, or regulation under this chapter or any authorizing statute;

(B) violates any final or temporary order or notice issued pursuant to this chapter;

(C) violates any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity; or

(D) violates any written agreement between the regulated entity and the Director.

(2) Second tierNotwithstanding paragraph (1), a regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $50,000 for each day during which a violation, practice, or breach continues, if—

(A) the regulated entity or entity-affiliated party, respectively—

(i) commits any violation described in any subparagraph of paragraph (1);

(ii) recklessly engages in an unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii) breaches any fiduciary duty; and

(B) the violation, practice, or breach—

(i) is part of a pattern of misconduct;

(ii) causes or is likely to cause more than a minimal loss to the regulated entity; or

(iii) results in pecuniary gain or other benefit to such party.

(3) Third tierNotwithstanding paragraphs (1) and (2), any regulated entity or entity-affiliated party shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues, if such regulated entity or entity-affiliated party—

(A) knowingly—

(i) commits any violation described in any subparagraph of paragraph (1);

(ii) engages in any unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii) breaches any fiduciary duty; and

(B) knowingly or recklessly causes a substantial loss to the regulated entity or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach.

(4) Maximum amounts of penalties for any violation described in paragraph (3)The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in paragraph (3) is—

(A) in the case of any entity-affiliated party, an amount not to exceed $2,000,000; and

(B) in the case of any regulated entity, $2,000,000.

(1) EstablishmentThe Director shall establish standards and procedures governing the imposition of civil money penalties under subsections (a) and (b). Such standards and procedures—

(A) shall provide for the Director to notify the regulated entity or entity-affiliated party in writing of the Director’s determination to impose the penalty, which shall be made on the record;

(B) shall provide for the imposition of a penalty only after the regulated entity, executive officer, or director or entity-affiliated party has been given an opportunity for a hearing on the record pursuant to section 4633 of this title; and

(C) may provide for review by the Director of any determination or order, or interlocutory ruling, arising from a hearing.

(2) Factors in determining amount of penalty

(3) Review of imposition of penalty

(d) Action to collect penalty

(e) Settlement by Director

(f) Availability of other remedies

(g) Prohibition of reimbursement or indemnification

(h) Deposit of penalties

(i) Applicability

(Pub. L. 102–550, title XIII, § 1376, Oct. 28, 1992, 106 Stat. 3991; Pub. L. 110–289, div. A, title I, § 1155, July 30, 2008, 122 Stat. 2775.)

§ 4636a. Removal and prohibition authority

(a) Authority to issue order

(1) In general

(2) ApplicabilityA party described in this paragraph is an entity-affiliated party or any officer, director, or management of the Office of Finance, if the Director determines that—

(A) that party, officer, or director has, directly or indirectly—

(i) violated—(I) any law or regulation;(II) any cease and desist order which has become final;(III) any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity; or(IV) any written agreement between such regulated entity and the Director;

(ii) engaged or participated in any unsafe or unsound practice in connection with any regulated entity or business institution; or

(iii) committed or engaged in any act, omission, or practice which constitutes a breach of such party’s fiduciary duty;

(B) by reason of the violation, practice, or breach described in subparagraph (A)—

(i) such regulated entity or business institution has suffered or will probably suffer financial loss or other damage; or

(ii) such party has received financial gain or other benefit; and

(i) involves personal dishonesty on the part of such party; or

(ii) demonstrates willful or continuing disregard by such party for the safety or soundness of such regulated entity or business institution.

(b) Suspension order

(1) Suspension or prohibition authorityIf the Director serves written notice under subsection (a) upon a party subject to that subsection (a), the Director may, by order, suspend or remove such party from office, or prohibit such party from further participation in any manner in the conduct of the affairs of the regulated entity, if the Director—

(A) determines that such action is necessary for the protection of the regulated entity; and

(B) serves such party with written notice of the order.

(2) Effective periodAny order issued under this subsection—

(A) shall become effective upon service; and

(B) unless a court issues a stay of such order under subsection (g), shall remain in effect and enforceable until—

(i) the date on which the Director dismisses the charges contained in the notice served under subsection (a) with respect to such party; or

(ii) the effective date of an order issued under subsection (b).

(3) Copy of order

(1) Notice

(2) Timing of hearingA hearing shall be fixed for a date not earlier than 30 days, nor later than 60 days, after the date of service of notice under subsection (a), unless an earlier or a later date is set by the Director at the request of—

(A) the party receiving such notice, and good cause is shown; or

(B) the Attorney General of the United States.

(3) Consent

(4) Issuance of order of suspensionThe Director may issue an order under this section, as the Director may deem appropriate, if—

(A) a party is deemed to have consented to the issuance of an order under paragraph (3); or

(B) upon the record made at the hearing, the Director finds that any of the grounds specified in the notice have been established.

(5) Effectiveness of order

(d) Prohibition of certain specific activitiesAny person subject to an order issued under this section shall not—

(1) participate in any manner in the conduct of the affairs of any regulated entity or the Office of Finance;

(2) solicit, procure, transfer, attempt to transfer, vote, or attempt to vote any proxy, consent, or authorization with respect to any voting rights in any regulated entity;

(3) violate any voting agreement previously approved by the Director; or

(4) vote for a director, or serve or act as an entity-affiliated party of a regulated entity or as an officer or director of the Office of Finance.

(e) Industry-wide prohibition

(1) In general

(2) Exception if Director provides written consent

(3) Violation of paragraph (1) treated as violation of order

(f) Applicability

(g) Stay of suspension and prohibition of entity-affiliated party

(h) Suspension or removal of entity-affiliated party charged with felony

(1) Suspension or prohibition

(A) In general

(B) Provisions applicable to notice

(i) Copy

(ii) Effective period

(2) Removal or prohibition

(A) In general

(B) Provisions applicable to order

(i) Copy

(ii) Effect of acquittal

(iii) Effective period

(3) Authority of remaining board members

(A) In general

(B) Appointment of temporary directors

(4) Hearing regarding continued participation

(A) In general

(B) Timing and form of hearing

(5) Rules

(Pub. L. 102–550, title XIII, § 1377, as added Pub. L. 110–289, div. A, title I, § 1153(a)(2), July 30, 2008, 122 Stat. 2770.)

§ 4636b. Criminal penalty

Whoever, being subject to an order in effect under section 4636a of this title, without the prior written approval of the Director, knowingly participates, directly or indirectly, in any manner (including by engaging in an activity specifically prohibited in such an order) in the conduct of the affairs of any regulated entity shall, notwithstanding section 3571 of title 18, be fined not more than $1,000,000, imprisoned for not more than 5 years, or both.

(Pub. L. 102–550, title XIII, § 1378, as added Pub. L. 110–289, div. A, title I, § 1156(a), July 30, 2008, 122 Stat. 2777.)

§ 4637. Notice after separation from service

The resignation, termination of employment or participation, or separation of an entity-affiliated party shall not affect the jurisdiction and authority of the Director to issue any notice and proceed under this subchapter against any such entity-affiliated party, if such notice is served before the end of the 6-year period beginning on the date such entity-affiliated party ceases to be associated with the regulated entity.

(Pub. L. 102–550, title XIII, § 1379, formerly § 1377, Oct. 28, 1992, 106 Stat. 3992; renumbered § 1379 and amended Pub. L. 110–289, div. A, title I, §§ 1153(a)(1), 1156(b)(1), 1157, July 30, 2008, 122 Stat. 2770, 2777.)

§ 4638. Private rights of action

This chapter shall not create any private right of action on behalf of any person against a regulated entity, or any director or executive officer of a regulated entity, or impair any existing private right of action under other applicable law.

(Pub. L. 102–550, title XIII, § 1379A, formerly § 1378, Oct. 28, 1992, 106 Stat. 3993; renumbered § 1379A and amended Pub. L. 110–289, div. A, title I, §§ 1153(a)(1), 1156(b)(2), July 30, 2008, 122 Stat. 2770, 2777.)

§ 4639. Public disclosure of final orders and agreements

(a) In general

The Director shall make available to the public—

(1) any written agreement or other written statement for which a violation may be redressed by the Director or any modification to or termination thereof, unless the Director, in the Director’s discretion, determines that public disclosure would be contrary to the public interest;

(2) any order that is issued with respect to any administrative enforcement proceeding initiated by the Director under this subchapter and that has become final in accordance with sections 4633 and 4634 of this title; and

(3) any modification to or termination of any final order made public pursuant to this subsection.

(b) Hearings

(d) Documents filed under seal in public enforcement hearings

(e) Retention of documents

(f) Disclosures to Congress

(Pub. L. 102–550, title XIII, § 1379B, formerly § 1379, Oct. 28, 1992, 106 Stat. 3993; renumbered § 1379B and amended Pub. L. 110–289, div. A, title I, §§ 1153(a)(1), 1156(b)(3), July 30, 2008, 122 Stat. 2770, 2777.)

§ 4640. Notice of service

Any service required or authorized to be made by the Director under this subchapter may be made by registered mail, or in such other manner reasonably calculated to give actual notice as the Director may by regulation or otherwise provide.

(Pub. L. 102–550, title XIII, § 1379C, formerly § 1379A, Oct. 28, 1992, 106 Stat. 3993; renumbered § 1379C, Pub. L. 110–289, div. A, title I, § 1153(a)(1), July 30, 2008, 122 Stat. 2770.)

§ 4641. Subpoena authority

(a) In general

In the course of or in connection with any proceeding, examination, or investigation under this chapter, the Director or any designated representative thereof, including any person designated to conduct any hearing under this subchapter shall have the authority—

(1) to administer oaths and affirmations;

(2) to take and preserve testimony under oath;

(3) to issue subpoenas and subpoenas duces tecum; and

(4) to revoke, quash, or modify subpoenas and subpoenas duces tecum.

(b) Witnesses and documents

(1) In general

(2) Power of court

(d) Fees and expenses

(e) Penalties

A person shall be guilty of a misdemeanor, and upon conviction, shall be subject to a fine of not more than $1,000 or to imprisonment for a term of not more than 1 year, or both, if that person willfully fails or refuses, in disobedience of a subpoena issued under subsection (c), to—

(1) attend court;

(2) testify in court;

(3) answer any lawful inquiry; or

(4) produce books, papers, correspondence, contracts, agreements, or such other records as requested in the subpoena.

(Pub. L. 102–550, title XIII, § 1379D, formerly § 1379B, Oct. 28, 1992, 106 Stat. 3994; renumbered § 1379D and amended Pub. L. 110–289, div. A, title I, §§ 1153(a)(1), 1156(b)(4), 1158, July 30, 2008, 122 Stat. 2770, 2777, 2778.)

§ 4642. Reporting of fraudulent loans

(a) Requirement to report

(b) Protection from liability for reports

(Pub. L. 102–550, title XIII, § 1379E, as added Pub. L. 110–289, div. A, title I, § 1115, July 30, 2008, 122 Stat. 2681.)