§ 501 — Restrictions on officers and employees of the department; penalty

§ 501. Restrictions on officers and employees of the department;\npenalty. (a) No officer or employee of the department shall obtain a\nloan or extension of credit from any regulated person or be interested\nin any such regulated person as a director, partner, owner, officer,\nattorney, agent, trustee or employee, or own or deal in, either directly\nor indirectly, the stocks or obligations of any such regulated person. A\nviolation of the provisions of this section by any officer or employee\nshall constitute sufficient grounds for his or her removal by the\nsuperintendent.\n (b) Nothing in this section shall be construed to prohibit any officer\nor employee from obtaining financing from a regulated person upon his or\nher primary or secondary residence, provided that the premises securing\nsuch loan are occupied by such employee, and further provided that such\nloan is reported to the department, which shall keep a record thereof.\nThe term "residence," for the purposes of this section, shall mean a\nsingle family or two family residence, condominium apartment or\ncooperative apartment, occupied in whole or in part, by the officer or\nemployee. The term "cooperative apartment" means a residence where\nownership is evidenced by certificates of stock or other evidence of an\nownership interest in, and a proprietary lease from, a corporation or\npartnership formed for the purpose of the cooperative ownership of real\nestate.\n (c) Nothing in this section shall be construed to prohibit any officer\nor employee from: (1) obtaining a loan secured by an assignment of his\nor her deposit in a banking organization, or an assignment or pledge of\nhis or her shares in a savings and loan association or credit union; (2)\naccepting financing of an automobile, truck or other personal property\nfrom a banking organization or a sales finance company; (3) entering\ninto a premium finance agreement with a premium finance agency; or (4)\nowning shares of an investment company (mutual fund) that may\nincidentally invest in the securities of any regulated person, provided\nthat the purpose of the investment portfolio of such investment company\nmay not be to invest primarily or exclusively in the securities of\nbanking or insurance entities. For purposes of this section, investment\ncompanies include open-end and closed-end investment companies and unit\ninvestment trusts as those terms are defined in an Act of Congress\nentitled "The Investment Company Act of 1940," as amended.\n (d) Nothing in this section shall be construed to prevent any officer\nor employee from becoming a policyholder of any insurer or from taking\nout a loan under the officer's or employee's insurance policy, or\nprevent or impair the ability of the superintendent to act as a\nliquidator, rehabilitator, or conservator pursuant to article\nseventy-four of the insurance law or article thirteen of the banking\nlaw.\n (e) The superintendent may promulgate policies and procedures for\nexempting particular employees, or classes of employees, from investment\nrestrictions in subsection (a) of this section as to regulated persons\nwith which such employee or class of employees has no authority or\ninvolvement.\n (f) This section shall not apply to investments held in a blind trust\napproved by the superintendent or the superintendent's designee.\n