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286.3-690 Cease and desist orders -- Orders of suspension or removal from office -Appeal -- Enforcement of orders.
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If the commissioner has knowledge or reasonable cause to believe that any bank or
trust company, or any director, officer, employee, agent, or other person
participating in the conduct of the affairs of the bank or trust company has engaged
in violations of law, or charter, or administrative regulation promulgated by the
department, or in unsafe or unsound business practices, the commissioner may issue
and serve upon the bank, trust company, director, officer, employee, agent, or other
person a notice of charges containing a statement of facts with respect to alleged
violations or practices, and shall fix the time and place at which an administrative
hearing shall be held to determine whether an order to cease and desist should issue
against the bank, trust company, director, officer, employee, agent, or other person.
The hearing shall be conducted in accordance with KRS Chapter 13B.
Unless the party or parties so served shall appear at the hearing personally or by a
duly-authorized representative, they shall be deemed to have consented to the
issuance of the cease and desist order.
If the parties consent, or if upon the record made at the hearing the commissioner
shall find that any violation or unsafe or unsound practice specified in the notice of
charges has been established, the commissioner may issue and serve upon the bank,
trust company, director, officer, employee, agent, or other person an order to cease
and desist from any violation or practice and, further, to take affirmative action to
correct the conditions resulting from any violation or practice.
If the commissioner shall determine that the violation or practice, as specified in the
notice of charges pursuant to subsection (1) of this section, or the continuation
thereof, is likely to cause insolvency or substantial dissipation of assets or earnings
of the bank or trust company, or is likely to otherwise seriously prejudice the
interests of its depositors or investors, the commissioner may issue an emergency
order pursuant to KRS 13B.125 requiring the bank or trust company, director,
officer, employee, agent, or other person to cease and desist from any violation or
practice.
A cease and desist order or an emergency cease and desist order shall become
effective upon service upon the bank or trust company. Unless set aside, limited or
suspended, as provided by subsection (6) of this section, a cease and desist order
shall remain effective and enforceable pending completion of an administrative
hearing conducted in accordance with KRS Chapter 13B.
Within ten (10) days after service of an emergency cease and desist order, the party
or parties served may apply to the Circuit Court for the county in which the bank is
located, or the Circuit Court of Franklin County, for an injunction setting aside,
limiting, or suspending the enforcement, operation, or effectiveness of the order
pending completion of the administrative hearing, and the court shall have
jurisdiction to issue an injunction.
In the case of violation or threatened violation of, or failure to obey, an emergency
cease and desist order or a cease and desist order issued pursuant to this section, the
commissioner may apply to the Circuit Court for the county in which the bank or
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trust company is located, or the Circuit Court of Franklin County, for an injunction
to enforce the order, and it shall be the duty of the court to issue the injunction.
If the commissioner shall determine that any officer or director of a bank or trust
company has committed any violation of law, of an administrative regulation, or of
a cease and desist order which has become final, or has engaged in or participated in
any unsafe or unsound practice in connection with the bank or trust company, or has
committed or engaged in any act, omission, or practice which constitutes a breach
of his or her fiduciary duty as officer or director, and the commissioner determines
that the bank or trust company has suffered or will probably suffer substantial
financial loss or other damages or that the interests of its depositors or investors
could be seriously prejudiced by reason of the violation or practice of breach of
fiduciary duty or that the director or officer has received financial gain by reason of
the violation or practice or breach of fiduciary duty, the commissioner may serve
upon the director or officer a written notice of intention to remove him or her from
office. The violation, practice, or breach shall be one (1) involving personal
dishonesty on the part of the director or officer, or one (1) which demonstrates a
willful or continuing disregard for the safety or soundness of the bank. The written
notice shall serve to suspend the officer or director from office. The suspension
shall become effective upon service of the notice and, unless stayed by a court in
proceedings authorized by subsection (10) of this section, shall remain in effect
pending the completion of the administrative hearing under subsection (9) of this
section. The resignation of an officer or director from the bank shall not prohibit the
commissioner from pursuing an action for removal of the officer or director.
A notice of intention to remove an officer or director from office shall contain a
statement of the facts constituting grounds therefor, and shall fix a time and place at
which an administrative hearing shall be held in accordance with KRS Chapter 13B.
Within ten (10) days after an officer or director has been suspended from office, the
officer or director may apply to the Circuit Court for the county in which the bank
or trust company is located for a stay of the suspension pending the completion of
the administrative hearing pursuant to the notice served upon the officer or director,
and the court shall have jurisdiction to grant the stay.
The bank, trust company, or person assessed shall be afforded an opportunity for an
administrative hearing upon request made to the commissioner within ten (10) days
after issuance of the assessment notice. The hearing shall be conducted in
accordance with KRS Chapter 13B.
Any person aggrieved by a final order of the commissioner under subsections (9) or
(11) of this section may obtain a review of the order by filing in the Circuit Court
for the county in which the bank or trust company is located a petition of appeal in
accordance with KRS Chapter 13B.
The commissioner may apply to the Circuit Court for the county in which the bank
or trust company is located for an injunction to enforce any final order issued under
subsection (9) of this section or any assessment made under subsection (11) of this
section, and it shall be the duty of the court to issue the injunction.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 646, effective July 15, 2010. -- Amended
1996 Ky. Acts ch. 318, sec. 214, effective July 15, 1996. -- Amended 1992 Ky. Acts
ch. 77, sec. 7. -- Amended 1984 Ky. Acts ch. 324, sec. 38, effective July 13, 1984. -Amended 1982 Ky. Acts ch. 251, sec. 16, effective April 1, 1982. -- Created 1970
Ky. Acts ch. 209, sec. 9, effective June 18, 1970.
Formerly codified as KRS 287.690.
Legislative Research Commission Note (7/12/2006). In accordance with 2006 Ky. Acts
ch. 247, secs. 38 and 39, this statute has been renumbered as a section of the
Kentucky Financial Services Code, KRS Chapter 286.
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