Sec. 36a-53. (Formerly Sec. 36-25). Proceedings by commissioner upon violation of banking laws. Civil penalties.
Sec. 36a-53. (Formerly Sec. 36-25). Proceedings by commissioner upon violation of banking laws. Civil penalties. (a) As used in this section, (1) "related person"
means a director, officer, employee, independent contractor, manager or general partner,
and (2) "Connecticut holding company" means a holding company that holds a subsidiary that is a Connecticut bank.
(b) (1) Whenever the commissioner finds as the result of an investigation that any
related person of any Connecticut bank, Connecticut holding company, Connecticut
credit union or Connecticut credit union service organization (A) has violated or is
violating any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition
imposed in writing by the commissioner, (B) has breached or is breaching any written
agreement with the commissioner, (C) has engaged or participated in or is engaging or
participating in any unsafe or unsound practice in connection with any bank, Connecticut
holding company, Connecticut credit union, federal credit union or credit union service
organization, (D) has been or is charged in any information, indictment or complaint
with the commission of or participation in a crime which is punishable by imprisonment
for a term exceeding one year under state or federal law, and continued service or participation by such related person may pose a threat to the interests of depositors or members,
or threatens to impair public confidence in any bank, Connecticut holding company,
Connecticut credit union, federal credit union or Connecticut credit union service organization, (E) has used or is using such related person's position in a manner contrary to
the interest of any bank, Connecticut holding company, Connecticut credit union, federal
credit union or credit union service organization, or its depositors or members, or (F)
has been or is negligent in the performance of such related person's duties, after having
been warned in writing by the commissioner to discontinue any such continuing delinquency, the commissioner may send notice to such related person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a
dated delivery receipt. The notice shall be deemed received by the related person on the
earlier of the date of actual receipt or seven days after mailing or sending. Any such
notice shall include: (i) A statement of the time, place and nature of the hearing; (ii) a
statement of the legal authority and jurisdiction under which the hearing is to be held;
(iii) a reference to the particular sections of the general statutes, regulations, rules or
orders alleged to have been violated; (iv) a short and plain statement of the matters
asserted; and (v) a statement indicating that such related person may file a written request
for a hearing on the matters asserted within fourteen days of receipt of the notice. If a
hearing is requested within the time specified in the notice, the commissioner shall hold
a hearing upon the matters asserted in the notice unless such related person fails to
appear at the hearing. After the hearing, if the commissioner finds that any of the grounds
set forth in subparagraphs (A) to (F), inclusive, of this subdivision exist with respect to
such related person, the commissioner shall order the removal of such related person
from office and from any participation in the management of the Connecticut bank,
Connecticut holding company, Connecticut credit union or Connecticut credit union
service organization. If such related person fails to appear at the hearing, the commissioner shall order the removal of such related person from office and from any participation in the management of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization. If the
commissioner finds that the protection of the Connecticut bank, Connecticut holding
company or its subsidiary that is a Connecticut bank, Connecticut credit union or Connecticut credit union service organization, or the interest of its depositors, depositors of
its subsidiary that is a Connecticut bank or members requires immediate action, the
commissioner may suspend any such related person from office and from further participation in the management of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization and require such
related person to take or refrain from taking such action as in the opinion of the commissioner will effectuate the purposes of this subsection, by incorporating a finding to that
effect in such notice. The suspension or prohibition shall become effective upon receipt
of such notice and, unless stayed by a court, shall remain in effect until the entry of a
permanent order or the dismissal of the matters asserted.
(2) Any related person who has been removed or suspended from office pursuant
to an order issued under this subsection may not continue to hold or commence holding
office as a related person of any bank, Connecticut credit union, federal credit union,
licensee or registrant under this title and title 36b or holding company that holds a
subsidiary that is a bank, while such order is in effect, without the written consent of
the commissioner.
(c) Whenever it appears to the commissioner that any Connecticut bank, Connecticut holding company, Connecticut credit union, Connecticut credit union service organization or any related person of any such entity (1) is violating, has violated or is about
to violate any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition
imposed in writing by the commissioner, (2) is breaching, has breached or is about to
breach any written agreement with the commissioner, (3) is engaging, has engaged or
is about to engage, in an unsafe or unsound practice, or (4) is using, has used or is about
to use such related person's position in a manner contrary to the interest of any bank,
Connecticut holding company, Connecticut credit union, federal credit union or credit
union service organization, the commissioner may send notice and take action against
the Connecticut bank, Connecticut holding company, Connecticut credit union, Connecticut credit union service organization or related person in accordance with section
36a-52. If the commissioner finds that the actual or threatened violation, breach, unsafe
or unsound practice or practices or use specified in such notice is likely to cause insolvency or substantial dissipation of assets or earnings of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization, or is likely to otherwise seriously prejudice the interests of its depositors or
members, the commissioner may incorporate a finding to that effect in such notice and
issue a temporary order requiring the Connecticut bank, Connecticut holding company,
Connecticut credit union, Connecticut credit union service organization or related person to cease and desist from any such violation, breach, practice or use and to take or
refrain from taking such action as in the opinion of the commissioner will effectuate
the purposes of this subsection. The temporary order shall become effective upon receipt
and, unless set aside or modified by a court, shall remain in effect until the effective
date of a permanent order or the dismissal of the matters asserted.
(d) (1) Whenever the commissioner finds as the result of an investigation that any
Connecticut bank, Connecticut holding company, Connecticut credit union, Connecticut credit union service organization or any related person of any such entity has (A)
violated any provision of the general statutes within the jurisdiction of the commissioner,
or any regulation, rule or order adopted or issued thereunder, or any condition imposed
in writing by the commissioner, (B) breached any written agreement with the commissioner, (C) engaged or participated in any unsafe or unsound practice, or (D) used such
related person's position in a manner contrary to the interest of any bank, Connecticut
holding company, Connecticut credit union, federal credit union or credit union service
organization, or its depositors or members, the commissioner may send notice to and
take action against such Connecticut bank, Connecticut holding company, Connecticut
credit union, Connecticut credit union service organization or related person regarding
the violation, breach, unsafe or unsound practice, or misuse of position in accordance
with section 36a-50. Any finding made by the commissioner pursuant to this subdivision
shall be considered a violation of this subsection for purposes of section 36a-50.
(2) Notwithstanding the provisions of section 36a-50, unless the violation, breach,
unsafe or unsound practice, or misuse of position found to have occurred pursuant to
this subsection and section 36a-50 is such that it (A) is part of a pattern of misconduct,
(B) has caused or is likely to cause a loss other than a de minimis loss to any bank,
Connecticut holding company, Connecticut credit union, federal credit union or credit
union service organization, (C) will result or has resulted in a pecuniary gain to a related
person of any Connecticut bank, Connecticut holding company, Connecticut credit
union or Connecticut credit union service organization, or (D) is a violation of sections
36a-53a to 36a-56, inclusive, or sections 36a-746b to 36a-746g, inclusive, the civil
penalty the commissioner may impose under this subsection and section 36a-50 shall
not exceed ten thousand dollars.
(3) In determining the amount of any penalty imposed under this subsection and
section 36a-50, the commissioner shall take into account (A) the size of the financial
resources and good faith of the Connecticut bank, Connecticut holding company, Connecticut credit union, Connecticut credit union service organization, or related person,
(B) the gravity of the violation, breach, unsafe or unsound practice or misuse of position,
(C) the history of previous violations, breaches, unsafe or unsound practices, or misuse
of position, and (D) such other matters as justice may require, except that this subdivision
does not apply to any violation of section 36a-53a and sections 36a-746b to 36a-746g,
inclusive.
(e) In connection with any investigation or proceeding under this section and section
36a-50, the commissioner shall make reasonable efforts to obtain from a federal banking
or credit union agency any relevant information that the commissioner knows to be in
the possession of such agency.
(f) The resignation, termination of employment or separation, including a separation
caused by the closing of the institution, of any related person against whom the commissioner may issue an order under this section, shall not affect the authority of the commissioner to issue any notice and proceed under this section against such related person if
such notice is sent before the end of the six-year period beginning on the date of such
resignation, termination of employment or separation.
(1949 Rev., S. 5748; 1967, P.A. 593, S. 1; 1971, P.A. 870, S. 92; P.A. 74-254, S. 1, 2, 11; P.A. 77-141; 77-614, S. 153,
161, 587, 610; P.A. 78-303, S. 85, 136; P.A. 80-482, S. 243, 348; P.A. 87-9, S. 2, 3; P.A. 88-230, S. 1, 12; P.A. 90-98, S.
1, 2; P.A. 92-12, S. 13; P.A. 93-142, S. 4, 7, 8; 93-194, S. 1, 7; P.A. 94-122, S. 29, 340; P.A. 99-158, S. 2; P.A. 01-34, S.
11; 01-48, S.11; P.A. 02-73, S. 4; P.A. 03-259, S. 3; P.A. 05-39, S. 1; P.A. 07-91, S. 15, 16.)
History: 1967 act clarified provisions of Subsec. (a) and added provisions detailing contents of notice, requiring that
hearing be held and allowing commissioner to suspend officers of governing board, etc., inserted new Subsec. (2) re notice
of charges and cease and desist orders, renumbered former Subsec. (2) as Subsec. (3) and included references to cease and
desist orders and added Subsec. (4) re applications to court for stay of suspension or prohibition, injunction, etc.; 1971 act
substituted court of common pleas for superior court in Subsec. (4), effective September 1, 1971, except that courts with
cases pending retain jurisdiction unless pending matters deemed transferable; P.A. 74-254 required that notice be in form
required under Sec. 4-177(b) rather than that it "contain a statement of the facts constituting the grounds for such removal"
and deleted reference to court proceedings under Subsec. (4) in Subsec. (1) and similarly changed wording of corresponding
provisions in Subsec. (2) and repealed Subsec. (4); P.A. 77-141 replaced advisory council on banking with banking commission throughout section but changes not enacted; P.A. 77-614 and P.A. 78-303 replaced bank commissioner with banking
commissioner, made banking department a division within the department of business regulation and replaced references
to advisory council on banking with references to commissioner and added Subsec. (4), effective January 1, 1979; P.A.
80-482 restored banking division as independent department with commissioner as its head and abolished the department
of business regulation; (Revisor's note: Pursuant to P.A. 87-9 "banking commissioner" was changed editorially by the
Revisors to "commissioner of banking"); P.A. 92-12 redesignated Subsecs. and made technical changes; P.A. 93-194
substantially rewrote Subsecs. (a) to (c), inclusive, added new Subsecs. (d) to (f), inclusive, and (h) and relettered the
remaining Subsecs. accordingly to specify under what conditions the commissioner may exercise his authority and institute
proceedings against any officer or member of a governing board of any institution which violates a banking order, rule or
regulation and added penalties, specific notice and hearing requirements, effective June 23, 1993, (Revisor's note: P.A.
88-230, P.A. 90-98 and P.A. 93-142 authorized substitution of "judicial district of Hartford" for "judicial district of Hartford-New Britain" in public acts of the 1993 session of the general assembly, to take effect September 1, 1996); P.A. 94-122
established hearing procedures for violations by bank officers and directors, deleted Subsecs. (c), (e), (g) and (h) and
relettered former Subsecs. (d) and (f) as Subsecs. (c) and (d), deleted Subdivs. (2) and (3) of former Subsec. (d), renumbered
former Subdivs. (4) and (5) as Subdivs. (2) and (3), and made technical changes, effective January 1, 1995; Sec. 36-25
transferred to Sec. 36a-53 in 1995; P.A. 99-158 amended Subsec. (c) by adding references to a violation of Sec. 36a-53a
and making technical changes in Subdivs. (2) and (3); P.A. 01-34 amended Subsec. (c) by adding references to Secs. 36a-746b to 36a-746g in Subdivs. (2) and (3); P.A. 01-48 amended Subsec. (a) by adding provisions re express delivery; P.A.
02-73 amended Subsecs. (a), (b) and (c) by adding provisions re Connecticut credit union service organizations, officers
or directors of Connecticut credit unions and officers, directors, managers or general partners of Connecticut credit union
service organizations; P.A. 03-259 defined "related person" and "Connecticut holding company" in new Subsec. (a),
redesignated existing Subsecs. (a) to (d), inclusive, as Subsecs. (b)(1) and (c) to (e), inclusive, substituted "related person"
for references to officers, directors, managers and general partners and inserted references to "Connecticut holding company" throughout, added Subsec. (b)(2) re related persons who have been removed or suspended from office, amended
Subsec. (d) by replacing references to "official position" with references to "position" and, in Subdiv. (2), replacing
reference to Sec. 36a-53a with reference to Secs. 36a-53a to 36a-56, inclusive, and increasing civil penalty from $1,000
to $10,000, added Subsec. (f) re resignation, termination of employment or separation of related person against whom
commissioner may issue order under this section, and made technical and conforming changes; P.A. 05-39 amended
Subsec. (c) to authorize commissioner to take action against related person of a Connecticut bank, Connecticut holding
company, Connecticut credit union or Connecticut credit union service organization, to add Subdiv. (4) re action if related
person is using, has used or is about to use position in a manner contrary to the interest of entity and to make conforming
changes, effective May 17, 2005; P.A. 07-91 amended Subsec. (b)(1) to allow commissioner to require related person to
take or refrain from taking such action as will effectuate purposes of this subsection and amended Subsec. (c) to allow
commissioner to issue a temporary order requiring Connecticut bank, Connecticut holding company, Connecticut credit
union, Connecticut credit union service organization or related person to take or refrain from taking such action as will
effectuate purposes of subsection, effective June 5, 2007.
See Secs. 36a-625 et seq. re licensing of business and industrial development corporations.