State Codes and Statutes

State Codes and Statutes

Statutes > California > Fin > 14300-14319

FINANCIAL CODE
SECTION 14300-14319



14300.  For purposes of this chapter, the following terms shall have
the following meanings:
   (a) "Officer with a subject institution" means the position of
director, officer, or employee with the subject institution.
   (b) "Subject institution" means any of the following:
   (1) A California credit union.
   (2) A subsidiary of a California credit union.
   (3) A foreign, whether other state or other nation, credit union,
other than a federal credit union, that maintains an office in this
state, with respect to the office.
   (4) Any other person, other than a federal credit union,
conducting business in this state.
   (c) "Subject person," when used with respect to a subject
institution, means any of the following:
   (1) A director, officer, employee, or agent of the subject
institution.
   (2) A member, consultant, joint venture partner, or other person
that participates in the affairs of a subject institution.
   (3) An independent contractor, including an appraiser or
accountant, who knowingly or recklessly participates in any of the
following acts if the act caused or is likely to cause a material
financial loss to, or a significant adverse effect on, the subject
institution.
   (A) A violation of any applicable law, regulation, or order.
   (B) A breach of fiduciary duty.
   (C) An unsafe or unsound act.
   (d) "Violation" includes any act done alone or with other persons
for or toward causing, bringing about, participating in, counseling,
aiding, or abetting a violation of any applicable statute,
regulation, provision of a written order issued by the commissioner,
or provision of a written operating agreement signed by the
commissioner and a subject institution or subject person.



14301.  Any requirement in this chapter for notice or hearing before
the commissioner issues an order may be waived by the person to whom
the order is issued.


14302.  (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 division. 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 appointed for the defendant
or the defendant's assets, or other relief 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 powers
of the defendant's officers, directors, partners, trustees, or
persons who exercise similar powers and perform similar duties. 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 an action authorized by subdivision
(a) a claim for ancillary relief, including 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) Neither the provision of subdivision (a) that authorizes the
appointment of a monitor, receiver, conservator, or other designated
fiduciary or officer of the court, nor any provision of subdivision
(b) or (c), applies to any of the following:
   (1) A California credit union that is authorized by the
commissioner to transact credit union business.
   (2) A foreign, whether other state or other nation, credit union
that maintains an office in this state in accordance with federal
law, the law of this state, and the law of the credit union's
domicile.
   (e) 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 another person may have to bring the same or
similar actions or to seek the same or similar relief.



14303.  (a) The commissioner may, without any prior notice or
hearing, order a person to cease and desist from violating Section
14150 if either of the following criteria are met:
   (1) The commissioner finds that the person has violated Section
14150.
   (2) The commissioner finds that there is reasonable cause to
believe that the person will imminently violate Section 14150.
   (b) (1) (A) Within 30 days after an order is issued pursuant to
subdivision (a), the person to whom the order is issued may file with
the commissioner an application for a hearing on the order.
   (B) 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 person consents, the order
shall be deemed rescinded.
   (C) Within 30 days after the hearing, or within any longer period
to which the person consents, the commissioner shall affirm, modify,
or rescind the order. If the commissioner fails to affirm, modify, or
rescind the order within this time limit, the order shall be deemed
rescinded.
   (2) The right of a 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).



14304.  If, after notice and a hearing, the commissioner finds any
of the factors set forth in subdivision (a) or (b) with respect to a
subject institution or subject person, the commissioner may order the
subject institution or subject person to cease and desist from the
action or violation:
   (a) That the subject institution or subject person has engaged or
participated, is engaging or participating, or that there is
reasonable cause to believe that the subject institution or subject
person will imminently engage or participate in any unsafe or unsound
act with respect to the business of the subject institution.
   (b) That the subject institution or subject person has violated,
is violating, or that there is reasonable cause to believe that the
subject institution or subject person will imminently violate, any
provision of this division, of any regulation or order issued under
this division, of any other applicable law, or of any written
agreement with the commissioner.



14305.  (a) If the commissioner finds that any of the factors set
forth in Section 14304 is true with respect to a subject institution
or subject person and that the action or violation is likely to have
any of the consequences set forth in paragraphs (1) to (4),
inclusive, the commissioner may, without any prior notice or hearing,
order the subject institution or subject person to cease and desist
from the action or violation:
   (1) To cause the insolvency of the subject institution.
   (2) To cause significant dissipation of the assets or earnings of
the subject institution.
   (3) To weaken the condition of the subject institution.
   (4) To otherwise prejudice the interests of the members of the
subject institution.
   (b) (1) (A) Within 30 days after an order is issued pursuant to
subdivision (a), any subject institution or subject person to whom
the order is issued may file with the commissioner an application for
a hearing on the order.
   (B) 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 subject institution or
subject person consents, the order shall be deemed rescinded.
   (C) Within 30 days after the hearing, or within any longer period
to which the subject institution or subject person consents, the
commissioner shall affirm, modify, or rescind the order. If the
commissioner fails to affirm, modify, or rescind the order within
this time limit, the order shall be deemed rescinded.
   (2) The right of any subject institution or subject 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
subject institution or subject person to apply to the commissioner
for a hearing on the order pursuant to paragraph (1).



14306.  An order issued pursuant to Sections 14303 to 14305,
inclusive, may include any of the following provisions:
   (a) Require the subject institution or subject person to take
affirmative action to correct any condition resulting from the action
or violation, including any of the following actions:
   (1) To make restitution or provide reimbursement, indemnification,
or guarantee against loss, if the subject institution or subject
person was unjustly enriched in connection with the action or
violation or if the action or violation involved a reckless disregard
for any provision of this division, any regulation or order issued
under this division, any other applicable law, or any agreement with
the commissioner.
   (2) Restrict the growth of the subject institution.
   (3) Dispose of any loan or other asset involved.
   (4) Correct violations of law.
   (5) Employ qualified officers or employees, who may be subject to
approval of the commissioner.
   (6) Take any other action that the commissioner may find to be
necessary or advisable.
   (b) Limit the business activities or functions of the subject
institution or subject person.



14307.  (a) If the commissioner finds that a subject institution's
books or records are so incomplete or inaccurate that the
commissioner is unable through the normal supervisory process to
determine the financial condition of the subject institution or of
the details or purpose of any transaction or transactions that may
materially affect the financial condition of the subject institution,
the commissioner may, without any prior notice or hearing, order the
subject institution to do any of the following:
   (1) To cease any activity or practice that gave rise, in whole or
in part, to the incomplete or inaccurate state of the books or
records.
   (2) To take affirmative action to restore the books or records to
a complete and accurate state.
   (b) (1) (A) Within 30 days after an order is issued pursuant to
subdivision (a), any subject institution or subject person to whom
the order is issued may file with the commissioner an application for
a hearing on the order.
   (B) 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 subject institution or
subject person consents, the order shall be deemed rescinded.
   (C) Within 30 days after the hearing, or within any longer period
to which the subject institution or subject person consents, the
commissioner shall affirm, modify, or rescind the order. If the
commissioner fails to affirm, modify, or rescind the order within
this time limit, the order shall be deemed rescinded.
   (2) The right of any subject institution or subject 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
subject institution or subject person to apply to the commissioner
for a hearing on the order pursuant to paragraph (1).



14308.  If, after notice and a hearing, the commissioner finds that
any of the factors set forth in subdivision (a), any of the factors
set forth in subdivision (b), and any of the factors set forth in
subdivision (c) are true with respect to a subject person of a
subject institution, the commissioner may issue an order suspending
or removing the subject person from the subject person's office, if
any, with the subject institution and prohibiting the subject person
from participating in any manner in the conduct of the affairs of the
subject institution without the approval of the commissioner:
   (a) (1) That the subject person has, directly or indirectly,
violated any provision of this division, of any regulation or order
issued under this division, of any other applicable law relating to
the business of the licensee, or of any written agreement with the
commissioner.
   (2) That the subject person has, directly or indirectly, engaged
or participated in any unsafe or unsound act in connection with the
business of the subject institution or any other business
institution.
   (3) That the subject person has, directly or indirectly, engaged
or participated in any act which constitutes a breach of the subject
person's fiduciary duty.
   (b) That, by reason of the act, violation, or breach of fiduciary
duty described in subdivision (a) the following have occurred:
   (1) The subject institution or business institution has suffered
or will probably suffer financial loss or other damage.
   (2) The interests of the members of the subject institution have
been or could be prejudiced.
   (3) The subject person has received financial gain or other
benefit.
   (c) That the act, violation, or breach of fiduciary duty described
in subdivision (a) either involves dishonesty on the part of the
subject person or demonstrates the subject person's willful or
continuing disregard for the safety or soundness of the subject
institution or business institution.



14309.  (a) If the commissioner finds that any of the factors set
forth in subdivision (a) of Section 14308, any of the factors set
forth in subdivision (b) of Section 14308, and any of the factors set
forth in subdivision (c) of Section 14308 are true with respect to a
subject person of a subject institution, and that an action is
necessary or advisable for the protection of the subject institution
or the interests of the members of the subject institution, the
commissioner may, without any prior notice or hearing, issue an order
that does both of the following:
   (1) Suspends the subject person from the subject person's office,
if any, with the subject institution.
   (2) Prohibits the subject person from participating in any manner
in the conduct of the affairs of the subject institution without the
approval of the commissioner.
   (b) (1) (A) Within 30 days after an order is issued pursuant to
subdivision (a), any subject person to whom the order is issued may
file with the commissioner an application for a hearing on the order.
   (B) 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 subject person consents, the
order shall be deemed rescinded.
   (C) Within 30 days after the hearing or within any longer period
to which the subject person consents, the commissioner shall affirm,
modify, or rescind the order. If the commissioner fails to affirm,
modify, or rescind the order within this time limit, the order shall
be deemed rescinded.
   (2) The right of any subject 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 subject person to apply
to the commissioner for a hearing on the order pursuant to paragraph
(1).



14310.  (a) If the commissioner finds that any of the factors set
forth in paragraph (1) and the factor set forth in paragraph (2) are
true with respect to a subject person or former subject person of a
subject institution, the commissioner may, without any prior notice
or hearing, issue an order suspending the subject person or former
subject person from his or her office, if any, with the subject
institution and prohibiting him or her from further participating in
any manner in the conduct of the affairs of the subject institution
without the approval of the commissioner:
   (1) That the subject person or former subject person has been
charged in an indictment issued by a grand jury or in an information,
complaint, or similar pleading issued by a United States attorney,
district attorney, or other governmental official or agency
authorized to prosecute crimes, with commission of or participation
in any of the following crimes:
   (A) A crime that involves dishonesty or breach of trust and that
is punishable by imprisonment for a term exceeding one year.
   (B) A criminal violation of any provision of this division.
   (C) A criminal violation of Section 1956, 1957, or 1960 of Title
18 of, or Section 5322 or 5324 of Title 31 of, the United States
Code.
   (D) A criminal violation of a law of any jurisdiction other than
the United States that is substantially similar to any of the
statutes specified in subparagraph (C).
   (2) That continued or resumed service or participation by the
subject person or former subject person may pose a threat to the
interests of the members of the subject institution or may threaten
to impair public confidence in the subject institution.
   (b) An order issued pursuant to subdivision (a) shall remain in
effect until the indictment or the information, complaint, or similar
pleading is finally disposed of or, if the order is earlier
terminated by the commissioner, until the order is so terminated.
   (c) If the commissioner finds that the factors set forth in
paragraphs (1) and (2) are true with respect to a subject person or
former subject person of a subject institution, the commissioner may,
without any prior notice or hearing, issue an order suspending or
removing the subject person or former subject person from his or her
office, if any, with the subject institution and prohibiting him or
her from further participating in any manner in the conduct of the
affairs of the subject institution without the approval of the
commissioner:
   (1) That the subject person or former subject person has been
finally convicted of any crime of the type described in paragraph (1)
of subdivision (a). For purposes of this paragraph, an agreement to
enter a pretrial diversion or similar program is deemed to be a
conviction.
   (2) That continued or resumed service or participation by the
subject person or former subject person may pose a threat to the
interests of the members of the subject institution or may threaten
to impair public confidence in the subject institution.
   (d) (1) (A) Within 30 days after an order is issued pursuant to
subdivision (a) or (c), any subject person or former subject person
of a subject institution to whom the order is issued may file with
the commissioner an application for a hearing on the order.
   (B) 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 subject person or former
subject person consents, the order shall be deemed rescinded.
   (C) Within 30 days after the hearing or within any longer period
to which the subject person or former subject person consents, the
commissioner shall affirm, modify, or rescind the order. If the
commissioner fails to affirm, modify, or rescind the order within
this time limit, the order shall be deemed rescinded.
   (2) The right of any subject person or former subject person of a
subject institution to whom an order is issued pursuant to
subdivision (a) or (c) 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).
   (e) The fact that any subject person of a subject institution
charged with a crime of the type described in paragraph (1) of
subdivision (a) is not finally convicted of the crime does not
preclude the commissioner from issuing an order regarding the subject
person pursuant to any other section of this division.



14311.  (a) Any subject institution, subject person of a subject
institution, or former subject person of a subject institution to
whom an order is issued under Sections 14308 to 14310, inclusive, may
apply to the commissioner to modify or rescind the order. In
deciding the application, the commissioner shall consider whether it
is in the public interest to modify or rescind the order and whether
it is reasonable to believe that the subject person or former subject
person will, if and when he or she becomes a subject person of a
subject institution, comply with all applicable provisions of this
division and of any regulation or order issued under this division.
   (b) The right of any subject institution, subject person of a
subject institution, or former subject person of a subject
institution to whom an order is issued under Sections 14308 to 14310,
inclusive, to petition for judicial review of the order shall not be
affected by the failure of the subject institution, subject person,
or former subject person to apply to the commissioner pursuant to
subdivision (a) to modify or rescind the order.



14312.  (a) For purposes of this section, "subject depository
institution" means any of the following:
   (1) A credit union that is organized under the laws of this state
or that maintains an office in this state.
   (2) An affiliate of an institution specified in paragraph (1).
   (b) It shall be unlawful for a subject person or former subject
person of a subject institution to whom an order is issued under
Sections 14308 to 14310, inclusive, willfully to do, directly or
indirectly, any of the following without the approval of the
commissioner so long as the order is in effect:
   (1) To act as a subject person of any subject depository
institution.
   (2) To vote any shares or other securities having voting rights
for the election of any person as a director of a subject depository
institution.
   (3) To solicit, procure, transfer or attempt to transfer, or vote
any proxy, consent, or authorization with respect to any shares or
other securities of a subject depository institution having voting
rights.
   (4) To otherwise participate in any manner in the conduct of the
affairs of any subject depository institution.



14313.  If the commissioner finds that any of the factors set forth
in subdivisions (a) to (g), inclusive, are true with respect to a
California credit union, the commissioner may by order, without any
prior notice or hearing, take possession of the property and business
of the California credit union:
   (a) That the California credit union has violated any provision of
this division, of another applicable law, of any order issued under
this division, or of any written agreement with the commissioner, or
has committed a material violation of any regulation of the
commissioner.
   (b) That the California credit union is conducting its business in
an unsafe or unsound manner.
   (c) That the California credit union is in such condition that it
is unsafe or unsound for it to transact credit union business.
   (d) That the California credit union has inadequate net worth or
is insolvent. The net worth of the credit union shall be considered
inadequate if it is less than 2 percent of the credit union's total
assets.
   (e) That the California credit union failed to pay any of its
obligations as they came due or is reasonably expected to be unable
to pay its obligations as they come due.
   (f) That the California credit union has ceased to transact credit
union business.
   (g) That the California credit union has, with the approval of its
board, requested the commissioner to take possession of its property
and business.



14314.  (a) If the commissioner takes possession of the property and
business of a California credit union pursuant to Section 14313, the
California credit union may, within 10 days, apply to the superior
court in the county where its principal executive office 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 the commissioner to
surrender the property and business of the California credit union to
the California credit union or make any further order as may be
just. The judgment of the court may be appealed by the commissioner
or by the California credit union in the manner provided by law for
appeals from the judgment of a superior court.
   (b) At any time after the commissioner takes possession of the
property and business of a California credit union pursuant to
Section 14313, the California credit union may, with the approval of
the commissioner, resume business upon conditions as the commissioner
may prescribe.



14315.  (a) On taking possession of the business and assets of any
credit union as provided in this chapter, the commissioner may
proceed to liquidate the credit union in the manner provided by
Article 8 (commencing with Section 305) of Chapter 2 of Division 1,
and the provisions of that article, except Sections 325, 325.1,
325.2, and 330, shall apply as if the California credit union were a
California state commercial bank, or he or she may appoint a
liquidating agent or a liquidating committee of three members of the
credit union to liquidate the business and assets of the credit union
in the manner provided in Article 2 (commencing with Section 15250)
of Chapter 9, except that in lieu of the certificate required under
Section 15252 the commissioner shall prepare and file in the office
of the Secretary of State a certificate of commencement of
liquidation proceedings upon taking possession of the business and
assets, and the commissioner or his authorized deputy shall
countersign the certificate referred to in Sections 15257 and 15258
whenever liquidation is involuntary. The commissioner may, however,
prepare and file a final certificate whenever he or she retains
possession of the assets of any credit union for the purpose of
liquidation. The liquidating agent need not be a member of the credit
union to be liquidated, and may be a person, firm, or corporation as
determined by the commissioner.
   (b) If the commissioner takes possession of the property and
business of a California credit union pursuant to Section 14313, the
commissioner may tender to the National Credit Union Administration
an appointment as conservator or receiver of the California credit
union. If the National Credit Union Administration accepts the
appointment, the National Credit Union Administration shall have, in
addition to any powers conferred by federal law, the powers conferred
on the commissioner pursuant to subdivision (a).



14316.  The commissioner shall supervise the acts of the liquidating
agent or the liquidating committee appointed under this article and
may remove the liquidating agent or any member of the liquidating
committee in his or her discretion.


14317.  If required by the commissioner, the liquidating agent or
the members of the liquidating committee appointed under this article
shall provide proof of bond coverage extending to the liquidating
agent or members of the liquidating committee. The bond shall include
coverage for fraud, dishonesty, and faithful performance. The
premium for that bond shall be paid out of the assets of the credit
union.



14318.  If the commissioner retains possession of the assets of a
credit union for purposes of liquidation, the commissioner shall use
the services of civil service employees of the commissioner's office
and the attorneys employed by the commissioner or the Department of
Justice shall render all necessary legal services, as the
commissioner may request.



14319.  In any case where the commissioner takes possession of a
subject institution pursuant to this article without a prior notice
or hearing, or takes action against a subject person without prior
notice or hearing, the commissioner shall, upon taking possession or
taking the action, concurrently provide to the subject institution or
person a written order. The order shall set forth the condition or
conditions of the subject institution or action or actions of the
subject person that constitute the basis or bases for the
commissioner's action as to the subject institution or subject
person. In any case where the commissioner takes possession of a
subject institution pursuant to this article, the commissioner shall
establish clear evidence upon which he or she is taking action
against the subject institution.