84R8547 EES-F
By: Parker H.B. No. 3555
A BILL TO BE ENTITLED
AN ACT
relating to certain administrative procedures and enforcement
authority relating to state banks, state trust companies, and bank
holding companies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. The heading to Section 31.201, Finance Code, is
amended to read as follows:
Sec. 31.201. BANKING COMMISSIONER HEARING; INFORMAL
DISPOSITION.
SECTION 2. Section 31.201, Finance Code, is amended by
adding Subsection (d) to read as follows:
(d) The banking commissioner may informally dispose of a
matter within the jurisdiction of and before the banking
commissioner by consent order, agreed settlement, or default.
SECTION 3. Subchapter A, Chapter 35, Finance Code, is
amended by adding Section 35.0001 to read as follows:
Sec. 35.0001. APPLICABILITY TO BANK SUBSIDIARIES. This
subchapter applies to a subsidiary of a state bank, a present or
former officer, director, or employee of a subsidiary, or a
controlling shareholder or other person participating in the
affairs of a subsidiary in the same manner as the subchapter applies
to a state bank, a present or former officer, director, or employee
of a state bank, or a controlling shareholder or other person
participating in the affairs of a state bank.
SECTION 4. Section 35.002, Finance Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) A proposed cease and desist order may require an
officer, employee, or director of a state bank, or the bank itself
acting through an authorized person, to cease or desist from a
violation or other practice or to take affirmative action to
correct the conditions resulting from a violation or other
practice, including the payment of restitution or other action that
the banking commissioner determines is appropriate.
SECTION 5. Subchapter A, Chapter 35, Finance Code, is
amended by adding Section 35.0035 to read as follows:
Sec. 35.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO
CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a
person is considered to have been finally convicted of an offense if
the person's case is not subject to further appellate review and:
(1) a sentence was imposed on the person;
(2) the person received probation or community
supervision, including deferred adjudication community
supervision; or
(3) the court deferred final disposition of the
person's case.
(b) The banking commissioner has grounds to remove or
prohibit a present or former officer, director, or employee of a
state bank from office or employment in, or prohibit a controlling
shareholder or other person participating in the affairs of a state
bank from further participation in the affairs of, a state bank or
any other entity chartered, registered, permitted, or licensed by
the banking commissioner if the person has been finally convicted
of a felony offense involving:
(1) a bank or other financial institution;
(2) dishonesty; or
(3) breach of trust.
(c) If the banking commissioner has grounds for action under
Subsection (b), the banking commissioner may serve a removal or
prohibition order, as appropriate, on the person who has been
finally convicted of a felony offense. The banking commissioner
shall also serve a copy of the order on any state bank that the
person is affiliated with at the time of service of the order.
(d) An order issued under this section becomes effective
immediately on service and continues in effect unless the order is:
(1) stayed or terminated by the banking commissioner;
(2) set aside by the banking commissioner after a
hearing; or
(3) stayed or vacated on appeal.
(e) Not later than the 30th day after the date an order is
issued under this section, the person against whom the order is
issued may request in writing a hearing before the banking
commissioner to show that the person's continued service to a state
bank or participation in the affairs of a state bank does not, or is
unlikely to, threaten the interests of the depositors, creditors,
or shareholders of the state bank or the public confidence in the
state bank.
(f) Not later than the 30th day after the date the request
for a hearing is received under this section, the banking
commission shall hold the hearing, unless the party requesting the
hearing requests a later date. At the hearing, the party requesting
the hearing has the burden of proof.
(g) After the hearing, the banking commissioner may affirm,
modify, or set aside, in whole or in part, the order. An order
affirming or modifying the order is immediately final for purposes
of enforcement and appeal. The order may be appealed as provided by
Sections 31.202, 31.203, and 31.204.
SECTION 6. Subchapter B, Chapter 35, Finance Code, is
amended by adding Section 35.1001 to read as follows:
Sec. 35.1001. APPLICABILITY TO BANK SUBSIDIARIES. This
subchapter applies to a subsidiary of a state bank, a present or
former officer, director, or employee of a subsidiary, or a
controlling shareholder or other person participating in the
affairs of a subsidiary in the same manner as the subchapter applies
to a state bank, a present or former officer, director, or employee
of a state bank, or a controlling shareholder or other person
participating in the affairs of a state bank.
SECTION 7. The heading to Section 181.201, Finance Code, is
amended to read as follows:
Sec. 181.201. BANKING COMMISSIONER HEARING; INFORMAL
DISPOSITION.
SECTION 8. Section 181.201, Finance Code, is amended by
adding Subsection (d) to read as follows:
(d) The banking commissioner may informally dispose of a
matter within the jurisdiction of and before the banking
commissioner by consent order, agreed settlement, or default.
SECTION 9. Subchapter A, Chapter 185, Finance Code, is
amended by adding Section 185.0001 to read as follows:
Sec. 185.0001. APPLICABILITY TO STATE TRUST COMPANY
SUBSIDIARIES. This subchapter applies to a subsidiary of a state
trust company, a present or former officer, director, manager,
managing participant, or employee of a subsidiary, or a controlling
shareholder or other person participating in the affairs of a
subsidiary in the same manner as the subchapter applies to a state
trust company, a present or former officer, director, manager,
managing participant, or employee of a state trust company, or a
controlling shareholder or other person participating in the
affairs of a state trust company.
SECTION 10. Section 185.002, Finance Code, is amended by
adding Subsection (b-1) to read as follows:
(b-1) A proposed cease and desist order may require an
officer, employee, director, manager, or managing participant of a
state trust company, or the state trust company itself acting
through an authorized person, to cease or desist from a violation or
other practice or to take affirmative action to correct the
conditions resulting from a violation or other practice, including
the payment of restitution or other action that the banking
commissioner determines is appropriate.
SECTION 11. Section 185.003(a), Finance Code, is amended to
read as follows:
(a) The banking commissioner has grounds to remove or
prohibit a present or former officer, director, manager, managing
participant, or employee of a state trust company from office or
employment in, or prohibit a controlling shareholder or participant
or other person participating in the affairs of a state trust
company from further participation in the affairs of, the state
trust company or any other entity chartered, registered, permitted,
or licensed by the banking commissioner if the banking commissioner
determines from examination or other credible evidence that:
(1) the person:
(A) intentionally committed or participated in
the commission of an act described by Section 185.002(a) with
regard to the affairs of a financial institution, as defined by
Section 201.101;
(B) violated a final cease and desist order
issued by a state or federal regulatory agency against the person or
an entity in which the person is or was an officer, director, or
employee; or
(C) made, or caused to be made, false entries in
the records of a financial institution;
(2) because of this action by the person:
(A) the financial institution has suffered or
will probably suffer financial loss or expense, or other damage;
(B) the interests of the clients, depositors,
creditors, or shareholders of the financial institution have been
or could be prejudiced; or
(C) the person has received financial gain or
other benefit by reason of the action, or likely would have if the
action had not been discovered; and
(3) that action by the person:
(A) involves personal dishonesty on the part of
the person; or
(B) demonstrates wilful or continuing disregard
for the safety or soundness of the financial institution.
SECTION 12. Subchapter A, Chapter 185, Finance Code, is
amended by adding Section 185.0035 to read as follows:
Sec. 185.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO
CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a
person is considered to have been finally convicted of an offense if
the person's case is not subject to further appellate review and:
(1) a sentence was imposed on the person;
(2) the person received probation or community
supervision, including deferred adjudication community
supervision; or
(3) the court deferred final disposition of the
person's case.
(b) The banking commissioner has grounds to remove or
prohibit a present or former officer, director, manager, managing
participant, or employee of a state trust company from office or
employment in, or prohibit a controlling shareholder or participant
or other person participating in the affairs of a state trust
company from further participation in the affairs of, the state
trust company or any other entity chartered, registered, permitted,
or licensed by the banking commissioner if the person has been
finally convicted of a felony offense involving:
(1) a financial institution, as defined by Section
201.101;
(2) dishonesty; or
(3) breach of trust.
(c) If the banking commissioner has grounds for action under
Subsection (b), the banking commissioner may serve a removal or
prohibition order, as appropriate, on the person who has been
finally convicted of a felony offense. The banking commissioner
shall also serve a copy of the order on any state trust company that
the person is affiliated with at the time of service of the order.
(d) An order issued under this section becomes effective
immediately on service and continues in effect unless the order is:
(1) stayed or terminated by the banking commissioner;
(2) set aside by the banking commissioner after a
hearing; or
(3) stayed or vacated on appeal.
(e) Not later than the 30th day after the date an order is
issued under this section, the person against whom the order is
issued may request in writing a hearing before the banking
commissioner to show that the person's continued service to a state
trust company or participation in the affairs of a state trust
company does not, or is unlikely to, threaten the interests of the
clients, depositors, creditors, or shareholders of the state trust
company or the public confidence in the state trust company.
(f) Not later than the 30th day after the date a request for
a hearing is received under this section, the banking commissioner
shall hold the hearing, unless the party requesting the hearing
requests a later date. At the hearing, the party requesting the
hearing has the burden of proof.
(g) After the hearing, the banking commissioner may affirm,
modify, or set aside, in whole or in part, the order. An order
affirming or modifying the order is immediately final for purposes
of enforcement and appeal. The order may be appealed as provided by
Sections 181.202, 181.203, and 181.204.
SECTION 13. Subchapter B, Chapter 185, Finance Code, is
amended by adding Section 185.1001 to read as follows:
Sec. 185.1001. APPLICABILITY TO STATE TRUST COMPANY
SUBSIDIARIES. This subchapter applies to a subsidiary of a state
trust company, a present or former officer, director, manager,
managing participant, or employee of a subsidiary, or a controlling
shareholder or other person participating in the affairs of a
subsidiary in the same manner as the subchapter applies to a state
trust company, a present or former officer, director, manager,
managing participant, or employee of a state trust company, or a
controlling shareholder or other person participating in the
affairs of a state trust company.
SECTION 14. Section 202.005, Finance Code, is amended by
adding Subsection (a-1) to read as follows:
(a-1) The grounds, procedures, and effects of an
enforcement proceeding brought under this section apply to a bank
holding company, an officer, director, or employee of a bank
holding company, or a controlling shareholder or other person
participating in the affairs of a bank holding company in the same
manner as the grounds, procedures, and effects apply to a state
bank, an officer, director, or employee of a state bank, or a
controlling shareholder or other person participating in the
affairs of a state bank.
SECTION 15. This Act takes effect September 1, 2015.