§ 41 — Removal and prohibition

§ 41. Removal and prohibition. 1. Grounds for enforcement action.\nWhenever the superintendent has reason to believe that any director,\ntrustee, officer, member or partner, or, in the case of a foreign\nbanking corporation, the person in charge, or an officer, of a branch or\nagency (for purposes of this section, each a "covered individual"), of\nany bank, trust company, limited purpose trust company, private bank,\nsavings bank, safe deposit company, savings and loan association, credit\nunion, investment company, bank holding company (as such term is defined\nin article three-A of this chapter), foreign banking corporation,\nlicensed lender, licensed casher of checks, budget planner, mortgage\nbanker, mortgage loan servicer, mortgage broker, licensed transmitter of\nmoney or student loan servicer (for purposes of this section, each a\n"covered entity") has, directly or indirectly: (a) caused, facilitated,\npermitted or participated in any violation by a covered entity of a law\nor regulation, order issued by the superintendent or any written\nagreement between such covered entity or covered individual and the\nsuperintendent; (b) engaged or participated in any unsafe or unsound\npractice in connection with any covered entity; or (c) engaged or\nparticipated in any willful material act or omitted to take any material\nact that directly contributed to the failure of a covered entity; the\nsuperintendent may bring an action to remove such covered individual\nfrom office.\n 2. Notice and hearing. (a) Whenever the superintendent has reason to\nbelieve that any grounds exist to remove a covered individual, the\nsuperintendent may serve a statement of the charges against such covered\nindividual, either personally or, upon a finding that such individual\ncannot be served personally within this state, by registered mail at the\nlast address of such individual shown on the department's records, and a\nnotice of an opportunity to appear before the superintendent to show\ncause why such covered individual should not be removed from office. A\ncopy of such notice shall also be sent to any affected covered entity.\n (b) If after notice and a hearing, the superintendent finds that the\ncovered individual has engaged in conduct described in subdivision one\nof this section, or if such covered individual waives a hearing, or\nfails to appear in person or by a duly authorized representative without\ngood cause shown at the time and place set for the hearing, the\nsuperintendent may issue an order removing the covered individual from\noffice and prohibiting the covered individual's employment or the\nperformance of any contractual agreements with any covered entity.\n (c) Such order and the findings of fact upon which it is based shall\nbe effective upon service on such covered individual personally or, upon\na finding that such individual cannot be served personally within this\nstate, by registered mail, and may not be made public or disclosed to\nanyone, except as provided in subdivision ten of section thirty-six of\nthis article or in connection with proceedings relating to a violation\nof this section. Such order shall also be served upon any affected\ncovered entity served with the statement of charges in the proceeding\nresulting in the order. Any such order shall remain in effect, unless it\nis amended or rescinded by the superintendent or a court of competent\njurisdiction, or replaced by an order issued pursuant to subdivision\nthree of this section.\n (d) To the extent consistent with the requirements in this section, a\nproceeding to remove a covered individual pursuant to this section shall\nbe conducted in accordance with the requirements of article three of the\nfinancial services law and regulations promulgated pursuant thereto.\n 3. Suspension pending determination of charges. Upon, or at any time\nafter service of written notice pursuant to subdivision two of this\nsection, the superintendent may suspend, pending the determination of\nthe charges, a covered individual from office or prohibit such\nindividual from participating in any manner in the conduct of the\naffairs of any covered entity for a period of up to one hundred eighty\ndays if the superintendent has reason to believe that by reason of the\nconduct described in subdivision one of this section: (a) a covered\nentity has suffered or will probably suffer financial loss that impacts\nits ability to operate in a safe and sound manner; (b) the interests of\nthe depositors at a covered entity have been or could be prejudiced; or\n(c) the covered individual demonstrates willful disregard for the safety\nand soundness of a covered entity. The superintendent may extend the\nsuspension for additional periods of up to one hundred eighty days if\nthe hearing is not completed within the prior suspension period due to\nthe request of the covered individual.\n 4. Effect of order for removal or suspension. Any covered individual\nsubject to an order issued pursuant to this section shall be prohibited\nfrom participating, in any manner, in the conduct of the affairs of any\ncovered entity unless permitted to, in writing, by the superintendent.\nAny covered individual who thereafter, without permission of the\nsuperintendent, participates in any manner in the management of a\ncovered entity shall be guilty of a misdemeanor.\n 5. Manner of review. Any order issued pursuant to this section may be\nreviewed in the manner provided by article seventy-eight of the civil\npractice law and rules.\n