Enforcement - Supervision - Financial - CA

Section § 8200

The law allows the commissioner to issue cease and desist orders against savings associations, savings and loan holding companies, or their subsidiaries if they are found violating state or federal laws or engaging in unsafe practices. These orders can demand that the organization fix the problem, such as making accurate financial records or taking action to prevent insolvency.

The commissioner can require specific corrective actions like refunding money if someone was unjustly enriched, limiting growth, selling assets, canceling contracts, or hiring qualified staff. The order specifies when it takes effect and how long it lasts, potentially until a court decides otherwise.

If an affected party disagrees with the order, they can quickly appeal to a court. The commissioner can also seek court support to enforce the order. The court is tasked with resolving any disputes and ensuring laws are followed.

The commissioner may issue cease and desist orders which may order affirmative action in accordance with the following:

(a) If the commissioner, as a result of any examination or from any report, finds or has reasonable cause to believe (1) that any savings association, savings and loan holding company or any of their subsidiaries, or an institution-affiliated party, (A) is violating or has violated any provision of this division or the laws of this state or of the United States or any order, regulation, or any condition imposed in writing by the commissioner in connection with the granting of any application of an association or any written agreement entered into with the commissioner or (B) is engaging or has engaged in an unsafe or unsound business practice, or (2) that an association, savings and loan holding company, or any of their subsidiaries are maintaining books and records that are so incomplete and inaccurate that the commissioner is unable, through the normal supervisory process, to determine their financial condition or the details or purpose of any transaction that may have a material effect on their financial condition, the commissioner may issue a formal written order to be served by delivery to the home office of the association or to the person named in the order. The order shall state the alleged violation or practice and state the facts in support of the allegation, and shall order discontinuance of the violation or practice and order conformance with all requirements of law. The commissioner may require the association or other named person to take affirmative action (A) to prevent the insolvency or dissipation of assets of the association, or (B) to restore the books and records to a complete and accurate state.

(b) The authority of the commissioner to issue orders to correct any conditions resulting from any violation or practice includes the authority to require the person named in the order to do any of the following:

(1) Make restitution or provide reimbursement, indemnification, or guarantee against loss if (A) the person named in the order was unjustly enriched in connection with the violation or practice or (B) the violation or practice involved a reckless disregard for any state or federal statute or applicable regulations or prior order of the commissioner.

(2) Restrict the growth of the association.

(3) Dispose of any loan or asset involved.

(4) Rescind agreements or contracts.

(5) Employ qualified officers or employees (who may be subject to prior approval of the commissioner at his or her direction).

(6) Take such other action as the commissioner determines to be appropriate.

(c) The authority to issue orders includes the authority to place limitations on the activities or functions of the person named in the order.

(d) The order shall specify an effective date, which may be immediate or may be at a later date, and shall remain in effect until withdrawn by the commissioner or until terminated by a court order.

(e) Any association or person affected by an order of the commissioner may apply within 10 days after service of the order to a court having jurisdiction for an immediate hearing and may request a stay of the order until the hearing has been completed. The hearing shall be held as provided in a notice to the commissioner by the court.

(f) The commissioner may, on or after the effective date of the order, apply for enforcement of the order to the superior court in the county in which the home office of the association or the person is located. The order shall be enforced ex parte and without notice by the court. The proceedings shall be given precedence over other cases pending in court, and shall in every way be expedited.

(g) Whether upon application by the commissioner or by the person named in the order, the court shall have jurisdiction, shall adjudicate the question, and shall enter and enforce the proper order or orders.

cease and desist orders affirmative action unsafe business practices ...

Section § 8201

This section allows the commissioner to remove or restrict individuals from working at savings associations if they're linked to certain violations, unsafe practices, or breaches of duty. These actions can happen if such violations lead to financial loss, harm depositors’ interests, or result in financial gain for the violator. If problems such as dishonesty or disregard for safety appear, the commissioner can issue a notice for removal or restriction and the concerned person has 10 days to request a public hearing.

If no hearing is requested, the commissioner can issue orders based on the notice. Removed individuals cannot work in any other savings association without permission from the commissioner. Immediate suspensions can also occur to protect the association, but individuals can apply to court to delay suspensions while proceedings are underway.

(a) Whenever the commissioner determines that any institution-affiliated party or any director, officer, or employee of a savings and loan holding company or affiliate thereof has committed any of the following violations, engaged or participated in any of the following unsafe or unsound practices, or committed any of the following breaches of fiduciary duty that meet the additional criteria of subdivision (b), the commissioner may serve upon that person a written notice of the commissioner’s intent to order the removal of the person from his or her office or employment or to prohibit any further participation (in any manner) in the conduct of the affairs of any savings association, or both:

(1) Violation of any statute or regulation, any cease and desist order which has become final, any condition imposed in writing by the commissioner in connection with the grant of any application or other request by the savings association or any written agreement between the savings institution and the commissioner.

(2) Engaging or participating in any unsafe or unsound practice in connection with any savings association.

(3) Committing or engaging in any act, omission, or practice which constitutes a breach of the person’s fiduciary duty.

(b) A violation, practice, or breach specified in subdivision (a) is subject to the commissioner’s authority under this section if the commissioner finds both of the following:

(1) By reason of the violation, practice, or breach (A) the savings association has suffered or will probably suffer financial loss or other damage (B) the interests of the savings association’s depositors have been or could be prejudiced, or (C) the institution-affiliated party or other person specified in subdivision (a) has received financial gain or other benefit by reason of the violation, practice, or breach.

(2) The violation, practice, or breach (A) involves personal dishonesty on the part of the institution-affiliated party or other person specified in subdivision (a) or (B) demonstrates willful or continuing disregard by the institution-affiliated party or other person for the safety or soundness of the savings institution.

(c) The written notice shall contain a full statement of the alleged violations, practices, or breaches of fiduciary duty, shall state the facts alleged in support of the violation, practice or breach, and shall state the commissioner’s intention to enter a removal or prohibition order, or both. The notice shall be delivered to the board of directors of the association, savings and loan holding company, or subsidiary, and to the institution-affiliated party or other director, officer, or employee concerned. If a hearing on the matter is requested within 10 days after service of the written notice, the commissioner shall hold a public hearing at which any pertinent evidence relating to the matters set forth in the written notice may be presented. After the hearing, the commissioner, on the basis of the evidence presented at the hearing, may proceed to enter (1) an order for the immediate removal of the institution-affiliated party or director, officer, or employee affected, (2) an order prohibiting further participation by the person, in any manner, in the conduct of the affairs of any savings association, (3) a reprimand of the individuals and entities or other persons concerned, or (4) a dismissal of the entire matter.

(d) If no hearing is requested within the time specified, the commissioner may proceed to issue orders of removal, prohibition, or both on the basis of the facts set forth in the written notice.

(e) No institution-affiliated party or director, officer, or employee who has been removed from his or her position pursuant to a removal order that has become final, shall thereafter participate in any manner in the conduct of the affairs of the savings association from or with respect to which that director, officer, or employee was removed, or without prior written approval of the commissioner, serve as a director, officer, or employee of any other savings association. No institution-affiliated party, including an officer, director, or employee, who is subject to an order of prohibition which has become final shall thereafter participate, in any manner, in the conduct of the affairs of any savings association.

(f) In respect to any officer, director, or employee of a savings association, savings and loan holding company or subsidiary thereof who is the subject of a written notice served by the commissioner pursuant to subdivision (a), the commissioner may, if the commissioner deems it necessary for the protection of the savings association or the interests of the association’s depositors, by written notice to that effect served upon the officer, director, employee, suspend him or her from office or prohibit him or her from further participation in any manner in the conduct of the affairs of the savings association or related entity, or take both these actions. The suspension or prohibition shall become effective upon service of the notice and, unless stayed by the court in proceedings authorized by subdivision (g), shall remain in effect pending completion of the proceedings pursuant to the written notice served under subdivision (a) and until the effective date of an order entered by the commissioner under subdivision (c) or (d). Copies of the notice shall also be served upon the savings association, savings and loan holding company, or subsidiary of which the person is a director, officer, or employee.

(g) Within 10 days after any director, officer, or employee has been suspended from office or prohibited from participation in the conduct of the affairs of a savings association, savings and loan holding company, or subsidiary thereof under subdivision (f), the director, officer, or employee may apply to a court having jurisdiction for a stay of the suspension or prohibition pending completion of the proceedings pursuant to subdivision (c), and the court shall have power to stay the suspension or prohibition.

institution-affiliated party removal unsafe practices breach of fiduciary duty ...

Section § 8202

The commissioner is required to publicly share final orders from administrative enforcement proceedings. This includes any changes or cancellations to those orders. However, if sharing an order could jeopardize a savings association's stability, the commissioner can postpone publication for a reasonable period.

(a) The commissioner shall publish and make the following available to the public:

(1) Any final order issued with respect to any administrative enforcement proceeding initiated by the commissioner pursuant to this division or any other provision of law.

(2) Any modification to, or termination of, any final order specified in paragraph (1).

(b) If the commissioner makes a determination in writing that the publication of any final order pursuant to subdivision (a) would seriously threaten the safety or soundness of a savings association, the commissioner may delay the publication of the order for a reasonable time.

commissioner public access final order ...