Enforcement - Foreign (Other State) Credit Unions - Financial - CA

Section § 16200

In this law, the commissioner can take legal actions in court to stop violations, ensure compliance, or collect penalties related to financial regulations. The court can issue orders such as injunctions and appoint fiduciaries like receivers to manage the situation.

The fiduciaries have the authority to act on behalf of the violating party's leaders, which can include filing for bankruptcy, and they are protected from lawsuits for performing these duties.

If it's in the public interest, the commissioner can also seek restitution or damages for those harmed by the violations, and the court can award additional relief.

This law does not prevent others from bringing similar legal actions or seeking similar relief.

(a) The commissioner may bring an action in the name of the people of this state in the superior court to enjoin any violation of, to enforce compliance with, or to collect any penalty or other liability imposed under this division or any regulation or order issued under this chapter. Upon a proper showing, a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and a monitor, receiver, conservator, or other designated fiduciary or officer of the court may be granted as appropriate.

(b) A receiver, monitor, conservator, or other designated fiduciary officer of the court appointed by the court pursuant to this section may, with the approval of the court, exercise all of the powers of the defendant’s officers, directors, partners, trustees, or persons who exercise similar powers and perform similar duties, including the filing of a petition for bankruptcy. No action at law or in equity may be maintained by any party against the commissioner, or a receiver, monitor, conservator, or other designated fiduciary or officer of the court by reason of their exercising these powers or performing these duties pursuant to the order of, or with the approval of, the court.

(c) If the commissioner finds that it is in the public interest, the commissioner may include in a claim for restitution, disgorgement, or damages on behalf of the person injured by the act or practice constituting the subject matter of the action, and the court shall have jurisdiction to award ancillary relief.

(d) The provisions of this section that authorize the commissioner to bring actions and seek relief are not intended to, and do not, affect any right that any other person may have to bring the same or similar actions or to seek the same or similar relief.

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Section § 16200.5

If the commissioner believes someone is violating a specific rule or is likely to do so, they can order that person to stop unless they get a license. If the person disagrees, they can request a hearing within 30 days of the order. The commissioner has 15 business days to start the hearing, or the order is canceled unless the person agrees to more time. During the hearing, the order can be confirmed, changed, or withdrawn. Additionally, even if the person doesn't ask for a hearing, they can still take the matter to court.

(a) If the commissioner finds that any person has violated, or that there is reasonable cause to believe that any person is about to violate, Section 16020, the commissioner may order the person to cease and desist from the violation unless and until the person is issued a license.

(b)

(1) Within 30 days after an order is issued pursuant to subdivision (a), the person to whom the order is directed may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence a hearing within 15 business days after the application is filed with him or her (or within such longer period to which the person consents), the order shall be deemed rescinded. At the hearing the commissioner shall affirm, modify, or rescind the order.

(2) The right of any person, to whom an order is issued under subdivision (a), to petition for judicial review of the order shall not be affected by the failure of the person to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

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Section § 16201

If a person is found to have broken any rule in this chapter, the commissioner, after a notice and hearing, can order that person to pay a financial penalty as described in another section.

If, after notice and hearing, the commissioner finds that any person has violated any provision of this chapter or of any regulation or order issued under this chapter, the commissioner may order the person to pay to the commissioner a civil penalty imposed pursuant to Section 216.3.

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Section § 16202

This law outlines the conditions under which the commissioner can suspend or revoke the license of an out-of-state credit union operating in California. Reasons include breaking laws or regulations, operating unsafely, being in poor financial health, stopping operations, becoming insolvent, failing to pay debts, undergoing or seeking bankruptcy, and having a receiver appointed. If the credit union's authority from its home state is suspended or revoked, or if any other similar serious issue exists that would have originally denied them a license, the commissioner's intervention is justified.

If, after notice and hearing, the commissioner finds any of the following with respect to a foreign (other state) credit union that is licensed to maintain an office in this state, the commissioner may issue an order suspending or revoking the license of the foreign (other state) credit union:

(a) That the foreign (other state) credit union has violated a provision of this division or of any regulation or order issued under this division or a provision of any other applicable law, regulation, or order.

(b) That the foreign (other state) credit union is transacting the business in this state or elsewhere in an unsafe or unsound manner.

(d) That the foreign (other state) credit union has ceased to operate its office.

(e) That the foreign (other state) credit union is insolvent in that it has ceased to pay its debts in the ordinary course of business, it cannot pay its debts as they become due, or its liabilities, including share accounts and certificates for funds, exceed its assets.

(f) That the foreign (other state) credit union has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due.

(g) That the foreign (other state) credit union is the subject of an order for relief in bankruptcy or has sought other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or that any person has applied for such relief under any such law against the foreign (other state) credit union, and the foreign (other state) credit union has by any affirmative act approved of or consented to the action or the relief has been granted.

(h) That a receiver, liquidator, or conservator has been appointed for the foreign (other state) credit union or that any proceeding for an appointment or any similar proceeding has been initiated in the home state of the foreign (other state) credit union.

(i) That the existence of the foreign (other state) credit union or the authority of the foreign (other state) credit union to transact banking business under the laws of the home state of the foreign (other state) credit union has been suspended or terminated.

(j) That any fact or condition exists that, if it had existed at the time when the foreign (other state) credit union applied for approval to transact business in this state, would have been grounds for denying the application.

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Section § 16203

This law allows the commissioner to immediately suspend or revoke the license of out-of-state credit unions operating in California if they pose a risk to creditors or the public interest. If a license is revoked, the credit union can request a hearing within 30 days. The commissioner must begin the hearing within 15 business days, or the revocation is canceled. After the hearing, the commissioner has 30 days to decide, otherwise, the order is canceled. Credit unions can still seek court review regardless of whether they requested a hearing with the commissioner.

(a) If the commissioner finds that any of the factors set forth in Section 16202 is true with respect to any foreign (other state) credit union that is licensed to maintain an office in this state and that it is necessary for the protection of the interests of creditors of the foreign (other state) credit union’s business in this state or, in any case, for the protection of the public interest that the commissioner immediately suspend or revoke the license of the foreign (other state) credit union, the commissioner may issue an order suspending or revoking the license of the foreign (other state) credit union.

(b)

(1) Within 30 days after an order is issued pursuant to subdivision (a), the foreign (other state) credit union to which the order is issued may file with the commissioner an application for a hearing on the order. If the commissioner fails to commence the hearing within 15 business days after the application is filed with the commissioner (or within any longer period to which the foreign (other state) credit union consents), the order shall be deemed rescinded. Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded.

(2) The right of any foreign (other state) credit union to which an order is issued under subdivision (a) to petition for judicial review of the order shall not be affected by the failure of the foreign (other state) credit union to apply to the commissioner for a hearing on the order pursuant to paragraph (1).

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Section § 16204

If a credit union from another state loses its license to operate an office in California, it must promptly give up the license to the commissioner.

Any foreign (other state) credit union whose license to maintain an office is suspended or revoked shall immediately surrender the license to the commissioner.

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Section § 16205

A foreign credit union that receives an order under Section 16202 or 16203 can ask the commissioner to change or cancel the order. However, the commissioner will only do so if it's in the public interest and if they believe the credit union will follow all laws and regulations when allowed to operate again.

Also, even if the credit union doesn't request a modification from the commissioner, it still has the right to seek a court review of the order.

(a) Any foreign (other state) credit union to which an order is issued under Section 16202 or 16203 may apply to the commissioner to modify or rescind the order. The commissioner shall not grant the application unless the commissioner finds that it is in the public interest to do so and that it is reasonable to believe that the foreign (other state) credit union will, if and when it is again authorized to maintain an office, comply with all applicable provisions of this division and of any regulation or order issued under this division.

(b) The right of any foreign (other state) credit union to which an order is issued under Section 16202 or 16203 to petition for judicial review of the order shall not be affected by the failure of the foreign (other state) credit union to apply to the commissioner pursuant to subdivision (a) to modify or rescind the order.

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Section § 16206

If a foreign credit union doing business in California is found to be in a concerning situation, the state commissioner can immediately take over its property and affairs to safeguard creditors and the public. This control continues until the credit union is stable enough to resume operations or undergoes liquidation.

The credit union can challenge the takeover in court within 10 days. The court can either stop the commissioner from proceeding or instruct them to return control to the credit union. If either party disagrees with the decision, they can appeal.

If liquidation occurs, the commissioner follows specific steps to either preserve or sell off the union's assets. Afterward, remaining assets are returned to the credit union, unless another state office of the credit union is insufficiently funded—in which case the commissioner may redirect funds there.

(a) If the commissioner finds that any of the factors set forth in Section 16202 is true with respect to any foreign (other state) credit union which is authorized to transact business in this state and that it is necessary for the protection of the interests of the creditors of the business of the foreign (other state) credit union in this state or for the protection of the public interest that he or she take immediate possession of the property and business of the foreign (other state) credit union, the commissioner may by order forthwith take possession of the property and business of the foreign (other state) credit union and retain possession until the foreign (other state) credit union resumes business in this state or is finally liquidated. The foreign (other state) credit union may, with the consent of the commissioner, resume business in this state under the conditions as the commissioner may prescribe.

(b)

(1) Whenever the commissioner takes possession of the property and business of a foreign (other state) credit union pursuant to subdivision (a), the foreign (other state) credit union may, within 10 days, apply to the superior court in the county in which the primary office in this state of the foreign (other state) credit union is located to enjoin further proceedings. The court may, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing, dismiss the application or enjoin the commissioner from further proceedings and order him or her to surrender the property and business of the foreign (other state) credit union to the foreign (other state) credit union or make any further order as may be just.

(2) The judgment of the court may be appealed by the commissioner or by the foreign (other state) credit union in the manner provided by law for appeals from the judgment of a superior court to the court of appeal. In case the commissioner appeals the judgment of the court, the appeal shall operate as a stay of the judgment, and the commissioner shall not be required to post any bond.

(c) Whenever the commissioner takes possession of the property and business of a foreign (other state) credit union pursuant to subdivision (a), the commissioner shall conserve or liquidate the property and business of the foreign (other state) credit union in accordance with Sections 14301 to 14304, inclusive.

(d) When the commissioner has completed the liquidation of the property and business of a foreign (other state) credit union in this state, the commissioner shall transfer any remaining assets to the foreign (other state) credit union in accordance with any order the court may issue. However, in case the foreign (other state) credit union has an office in another state of the United States which is in liquidation and the assets of that office appear to be insufficient to pay in full the creditors of that office, the court shall order the commissioner to transfer to the liquidator of that office the amount of any remaining assets as appears to be necessary to cover the insufficiency. If there are two or more offices and the amount of remaining assets is less than the aggregate amount of insufficiencies with respect to those offices, the court shall order the commissioner to distribute the remaining assets among the liquidators of the offices in the manner as the court determines.

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