Chapter 4Operations

Section § 450

Explanation

This law section explains when and to whom the commissioner can share information about financial matters. It states that the commissioner can share information with various governmental agencies, including those that regulate financial institutions, administer loan guarantee programs, oversee business activities, and law enforcement agencies. It also includes sharing with people involved in credit union share insurance and licensee management teams. The section clarifies that there are other possible circumstances where information may be shared, not limited to those explicitly mentioned.

(a)CA Financial Code § 450(a) In this section, “governmental agency” includes, without limitation, any agency of this state, of any other state of the United States, of the United States, or of any foreign nation.
(b)CA Financial Code § 450(b) The commissioner may furnish information to a governmental agency that regulates financial institutions.
(c)CA Financial Code § 450(c) The commissioner may furnish to a governmental agency that administers a loan guarantee or similar program, information relating to a person who participates in the program.
(d)CA Financial Code § 450(d) The commissioner may furnish to a governmental agency that regulates business activities, other than the type described in subdivision (b), information relating to any of the following:
(1)CA Financial Code § 450(d)(1) A suspected violation of a law administered by the agency.
(2)CA Financial Code § 450(d)(2) A person involved in an application to the agency for a license, approval, or other authorization.
(e)CA Financial Code § 450(e) The commissioner may furnish to a governmental agency that is a law enforcement agency information relating to a suspected crime.
(f)CA Financial Code § 450(f) The commissioner may furnish information to any person who provides share insurance or guaranty of the shares of a credit union in accordance with Section 14858, 16004, or 16503.
(g)CA Financial Code § 450(g) The commissioner may furnish confidential information regarding a licensee to the directors, officers, employees, attorneys, accountants, and consultants of that licensee in accordance with Section 452.
(h)CA Financial Code § 450(h) This section does not prescribe the only circumstances under which the commissioner may furnish information.
governmental agency financial institutions loan guarantee business regulation suspected violation license application law enforcement confidential information credit union shares share insurance licensee information information sharing commissioner authority suspected crime
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 451

Explanation

A regulatory agency from another state or country can inspect a financial licensee in California if they get prior approval from the commissioner and have a regulatory reason for doing so. Once approved, these agencies are treated as supervisory agencies under California’s government regulations.

With the prior approval of the commissioner, a foreign (other state) or foreign (other nation) financial institutions regulatory agency may examine a licensee and any of its offices, provided that the agency has a regulatory interest in the licensee. Any regulatory agency approved by the commissioner under this section shall be considered a supervisory agency under subdivision (f) of Section 7480 of the Government Code.
foreign financial institutions examine a licensee commissioner approval regulatory interest supervisory agency cross-border regulation international financial regulation foreign regulatory agency financial institutions oversight California financial rules Section 7480 government code regulatory agency approval
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 452

Explanation

This law section prohibits certain individuals—like directors, officers, employees, attorneys, and consultants—associated with a licensed financial entity from sharing confidential information they received from the commissioner. However, there are exceptions allowing such disclosures, like when ordered by a court, to specific regulatory or law enforcement agencies, or as required by law. Violating this rule could lead to a civil fine of up to $50,000. The law does permit sharing this confidential information internally among authorized personnel within the organization.

(a)CA Financial Code § 452(a) Directors, officers, employees, attorneys, accountants, or consultants of a licensee may not disclose in any manner to any person confidential information regarding the licensee received from the commissioner. The prohibition in this section shall not apply to disclosures of confidential information by directors, officers, employees, attorneys, accountants, or consultants of the licensee:
(1)CA Financial Code § 452(a)(1) Made pursuant to a subpoena or other discovery proceeding.
(2)CA Financial Code § 452(a)(2) Made to any state or federal prosecuting or investigatory agency or authority.
(3)CA Financial Code § 452(a)(3) Made to any state, federal, or foreign (other nation) financial institutions regulatory agency that has a direct regulatory interest in the licensee.
(4)CA Financial Code § 452(a)(4) Made to any state or federal taxing agency.
(5)CA Financial Code § 452(a)(5) Made as otherwise required by law.
(6)CA Financial Code § 452(a)(6) Made as otherwise authorized by the commissioner in writing.
(b)CA Financial Code § 452(b) Any director, officer, employee, attorney, accountant, or consultant that discloses confidential information in a manner other than allowed by this section shall be liable for a civil penalty not to exceed fifty thousand dollars ($50,000). The commissioner may impose a penalty under this section in accordance with the procedures set forth in Section 329.
(c)CA Financial Code § 452(c) The prohibition set forth in subdivision (a) shall not apply to any discussion, analysis, or other use of confidential information provided by the commissioner that occurs between directors, officers, employees, attorneys, accountants, or consultants of the licensee.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 453

Explanation

This law requires any licensed business to submit a financial report to the commissioner whenever asked. The report needs to be in a format and verified in a way specified by the commissioner. It should reflect the company’s financial status as of a specific day chosen by the commissioner. Additionally, the officers who verify the report must personally know the information it contains and believe it's truthful.

Every licensee shall make and file with the commissioner whenever required by him or her a report in any form as the commissioner may prescribe and verified in any manner the commissioner prescribes, showing its financial condition and any other information as the commissioner may require at the close of business on any day designated by him or her. Any verification shall state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement in the report is true.
licensee financial report business financial condition report verification commissioner requirements officer verification financial status report designated day report truthful statement affirmation business reporting obligations regulated financial reporting
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 454

Explanation

The commissioner is required to request reports from all licensed individuals or entities at least four times a year. The commissioner picks the dates for these requests.

The commissioner shall call for the report specified in Section 453 from all licensees at least four times each year upon dates selected by the commissioner.
commissioner report Section 453 report licensees quarterly reporting reporting schedule financial reporting report request dates licensee obligations regulatory compliance periodic submissions reporting frequency compliance deadlines report submission requirements commissioner's authority financial oversight
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 455

Explanation

This law lets the commissioner ask a licensee to provide a special report that gives detailed information about their financial status and other affairs. The commissioner decides the form of the report and the due date, and it might need to be verified in a particular way if the commissioner requires it. This ensures the commissioner is fully informed about the licensee's true financial condition.

The commissioner may at any time require any licensee to make and file with him or her a special report furnishing any information as the commissioner may specify when necessary to inform him or her fully of the actual financial condition and all other affairs of the licensee. The reports shall be in the form and filed on a date prescribed by the commissioner and shall, if required by the commissioner, be verified in any manner that he or she prescribes.
special report financial condition licensee commissioner requirements information verification report filing licensee affairs financial status reporting commissioner's authority information disclosure report form filing date financial transparency compliance reporting verification methods
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 456

Explanation

This law requires that all businesses with a license must maintain their records, including financial records and account books, in English, and in a way that is approved by the commissioner.

Every licensee shall keep its corporate records, financial records, and books of account in words and figures of the English language and in form satisfactory to the commissioner.
corporate records financial records books of account English language record keeping business license requirements commissioner approval licensed businesses record format compliance regulatory compliance business record standards financial documentation accounting records California business requirements record management
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 457

Explanation

If a business with a license has changes in any of their key leadership positions, such as the chairperson, CEO, president, general manager, managing officer, CFO, or chief credit officer, they must inform the commissioner about the changes.

Every licensee shall notify the commissioner of any change in the following officers of the licensee, to the extent that those officers exist within the licensee: chairperson, chief executive officer, president, general manager, managing officer, chief financial officer, or chief credit officer.
licensee notification change in officers key leadership positions inform commissioner CEO change CFO update chairperson change president role change general manager update managing officer change chief credit officer corporate officer changes leadership changes business management updates financial officer notification
(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 458

Explanation

This section states that anyone required to submit a report under laws overseen by the commissioner must do so at the specified time. If a license holder fails to submit their report on time, or leaves out required details, they can be fined up to $100 for each day the report is not turned in. Additionally, another rule (Section 329) does not apply to this section.

(a)CA Financial Code § 458(a) Each report required under this article, or under any other provision of law administered by the commissioner, shall be filed with the commissioner at the time that the commissioner may require. If any licensee fails to make any required report at the time specified by the commissioner or fails to include therein any matter required by this article, any provision of law administered by the commissioner, or by the commissioner, it shall be liable to the people of this state in the sum of not more than one hundred dollars ($100) for each day that the report is delayed or withheld by the failure or neglect of the licensee.
(b)CA Financial Code § 458(b) The provisions of Section 329 shall not apply to this section.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 459

Explanation

This section requires any licensed entity to submit to the commissioner a copy of all documents they file with federal supervisory or law enforcement agencies. The copies must be sent to the commissioner by the same date they are filed with those agencies.

These documents should be accessible to the public unless they are protected by confidentiality laws.

(a)CA Financial Code § 459(a) Every licensee shall file with the commissioner one copy of all material filed by the licensee with a federal agency that is charged with the supervision and regulation of that licensee, or a law enforcement agency.
(b)CA Financial Code § 459(b) Each copy required to be filed pursuant to subdivision (a) shall be filed with the commissioner on or before the date upon which the original is filed with the agencies specified in subdivision (a) and shall be available for inspection by the public except to the extent the information contained therein is accorded confidential treatment under state or federal law or regulations.
licensee compliance document submission federal agency filing supervision and regulation public inspection confidential treatment state or federal law licensee obligations law enforcement agency commissioner requirements
(Amended by Stats. 2014, Ch. 64, Sec. 9. (AB 2742) Effective January 1, 2015.)

Section § 460

Explanation

If someone knowingly makes a false statement in a report that must be submitted under the rules managed by the commissioner, they can be charged with perjury.

Any person intentionally making a false statement in any report required to be rendered under this article or other provision of law administered by the commissioner is guilty of perjury.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 461

Explanation

In California, if you owe money to a licensed lender and haven't paid interest for a year, the lender must usually write off the debt. However, this doesn't apply if the debt is backed by good security or if the lender is actively trying to collect it.

Any debt due a licensee on which interest is past due and unpaid for the period of one year shall be charged off, unless the debt is well secured or is in process of collection.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 462

Explanation

If a person provides services to a licensed business and the financial commissioner asks, that person must undergo an examination by the commissioner. This examination will be at the person’s own expense. If the person refuses the examination, the commissioner can order licensees to stop doing business with that person, and the licensees must follow this order.

Any person that provides services to any licensee, at the request of the commissioner, shall submit to an examination by the commissioner. Should the commissioner deem it necessary or desirable that an examination be made of a person, the examination shall be made at the expense of the person examined. If the person refuses to permit an examination to be made, the commissioner may order every licensee receiving services from that person to discontinue receiving those services or otherwise conducting business with that person, and the licensees shall comply with that order.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 463

Explanation

This section explains that when dealing with financial statements of a licensed business, such as balance sheets and income statements, they should be prepared according to U.S. generally accepted accounting principles (GAAP). However, there might be specific requirements due to other laws or regulations that need to be followed.

The commissioner has the authority to order that financial statements be prepared in a different way than GAAP if it helps fulfill the objectives of this law.

(a)CA Financial Code § 463(a) All references in this code and the Corporations Code to financial statements, balance sheets, income statements, and statements of changes in financial position of a licensee, and all references to assets, liabilities, earnings, retained earnings, shareholders’ equity, net worth, and similar accounting items of a licensee, mean those financial statements or those items prepared or determined in conformity with generally accepted accounting principles then applicable in the United States, fairly presenting in conformity with generally accepted accounting principles accepted in the United States the matters which they purport to present, subject to any specific accounting treatment required by any applicable provision of the Corporations Code, this code, or any regulation, order issued by the commissioner, or agreement entered into by the commissioner and a licensee.
(b)CA Financial Code § 463(b) The commissioner may, by regulation or order, require that any financial statement or accounting item of a licensee be prepared or determined in a manner other than in conformity with generally accepted accounting principles accepted in the United States if the commissioner finds that such other manner is necessary or appropriate to carry out the purposes or provisions of this code.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)

Section § 464

Explanation

This law explains that financial institutions must share information about a person's assets with the State Department of Health Care Services if that person has applied for or is receiving benefits and has given permission. This sharing of information should not incur costs for the applicant or recipient.

The Department’s request for financial records is exempt from certain federal privacy act requirements and doesn't need to be shown to the bank. Additionally, specific federal certification and description requirements do not apply to the Department’s requests in these cases.

(a)CA Financial Code § 464(a) An officer of a financial institution, within the meaning of Section 1101(1) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3401(1)), shall furnish the State Department of Health Care Services or its designee with information in the possession of the bank or company regarding the assets of any person who is applying for, or is receiving assistance or benefits from, the State Department of Health Care Services and has provided authorization pursuant to Section 14013.5 of the Welfare and Institutions Code.
(b)CA Financial Code § 464(b) The obtaining of financial records by the State Department of Health Care Services, or its designee, pursuant to this section shall be subject to the cost reimbursement requirements of Section 1115(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3415(a)) and shall be at no cost to the applicant, recipient, or any other person, as defined in paragraph (3) of subdivision (c) of Section 14013.5 of the Welfare and Institutions Code.
(c)CA Financial Code § 464(c) An authorization obtained by the State Department of Health Care Services, or its designee, under Section 14013.5 of the Welfare and Institutions Code shall be considered as meeting the requirements of Section 1103(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3403(a)) and, notwithstanding Section 1104(a) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3404(a)), need not be furnished to the financial institution.
(d)CA Financial Code § 464(d) The certification requirements of Section 1103(b) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3403(b)) shall not apply to requests by the State Department of Health Care Services, or its designee, pursuant to an authorization provided under Section 14013.5 of the Welfare and Institutions Code.
(e)CA Financial Code § 464(e) A request by the State Department of Health Care Services, or its designee, pursuant to an authorization provided under Section 14013.5 of the Welfare and Institutions Code shall be deemed to meet the requirements of Section 1104(a)(3) of the federal Right to Financial Privacy Act of 1978 (12 U.S.C. Sec. 3404(a)(3)) and of Section 1102 of the act (12 U.S.C. Sec. 3402), relating to a reasonable description of financial records.
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(Added by Stats. 2011, Ch. 243, Sec. 2. (SB 664) Effective January 1, 2012.)