2014 Indiana Code TITLE 28. FINANCIAL INSTITUTIONS ARTICLE 11. DEPARTMENT OF FINANCIAL INSTITUTIONS CHAPTER 4. ENFORCEMENT POWERS OF THE DEPARTMENT
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IC 28-11-4
Chapter 4. Enforcement Powers of the Department
IC 28-11-4-1
Application of IC 4-21.5
Sec. 1. (a) Except as provided in subsection (b), IC 4-21.5 does
not apply to a proceeding under this chapter.
(b) IC 4-21.5-5 applies to judicial review of a final order of the
department under this chapter.
As added by P.L.33-1991, SEC.56.
IC 28-11-4-2
Unsafe or unsound practices or violations of law; notice of charges;
joint exercise of enforcement powers with federal regulators
Sec. 2. If the director has reasonable cause to believe that a
financial institution:
(1) has engaged, is engaging, or will engage in an unsafe or
unsound practice in conducting the business of the financial
institution; or
(2) has violated, is violating, or will violate a:
(A) statute;
(B) rule;
(C) condition imposed in writing by the director in
connection with the granting of an application or other
request by the financial institution; or
(D) written agreement entered into with the department;
the director may issue and serve upon the financial institution a
notice of charges of the practice or violation. The department may,
when appropriate, exercise enforcement powers under this chapter
jointly with a financial institution's primary federal regulator.
As added by P.L.33-1991, SEC.56. Amended by P.L.141-2005,
SEC.22.
IC 28-11-4-3
Violations by certain individuals; director's notice of intent to issue
order; felonies; civil penalties
Sec. 3. (a) If the director determines that a current or former
director, officer, or employee of a financial institution has:
(1) committed a violation of a statute, a rule, a final cease and
desist order, any condition imposed in writing by the director in
connection with the grant of any application or other request by
the financial institution, or any written agreement between the
financial institution and the director or the department;
(2) engaged or participated in an unsafe or unsound practice in
connection with the financial institution;
(3) committed or engaged in an act, an omission, or a practice
that constitutes a breach of fiduciary duty as director, officer, or
employee; or
(4) been convicted of, or is under indictment for, a felony
involving fraud, deceit, or misrepresentation under the laws of
Indiana or any other jurisdiction;
the director, subject to subsection (b), may issue and serve upon the
officer, director, or employee a notice of the director's intent to issue
an order removing the person from the person's office or
employment, an order prohibiting any participation by the person in
the conduct of the affairs of any financial institution, or an order both
removing the person and prohibiting the person's participation.
(b) A violation, practice, or breach specified in subdivision (a) is
subject to the authority of the director under subsection (a) if the
director finds any of the following:
(1) By reason of the violation, practice, or breach, the financial
institution has suffered or will probably suffer substantial
financial loss or other damage.
(2) The interests of the financial institution's depositors could be
seriously prejudiced by reason of the violation, practice, or
breach of fiduciary duty.
(3) The violation, practice, or breach involves personal
dishonesty on the part of the officer, director, or employee
involved.
(4) The violation, practice, or breach demonstrates a willful or
continuing disregard by the officer, director, or employee for the
safety and soundness of the financial institution.
(c) A person who:
(1) is under indictment for; or
(2) has been convicted of;
a felony involving fraud, deceit, or misrepresentation under the laws
of Indiana or any other jurisdiction may not serve as a director, an
officer, or an employee of a financial institution, or serve in any
similar capacity, unless the person obtains the written consent of the
director.
(d) A financial institution that willfully permits a person to serve
the financial institution in violation of subsection (b) or (c) is subject
to a civil penalty of five hundred dollars ($500) for each day the
violation continues. A civil penalty paid under this subsection must
be deposited into the financial institutions fund established by
IC 28-11-2-9.
As added by P.L.33-1991, SEC.56. Amended by P.L.262-1995,
SEC.76; P.L.258-2003, SEC.19; P.L.10-2006, SEC.74 and
P.L.57-2006, SEC.74; P.L.213-2007, SEC.100; P.L.217-2007,
SEC.98; P.L.35-2010, SEC.198; P.L.137-2014, SEC.39.
IC 28-11-4-4
Director's notice of intent to issue order; contents; hearing; final
order; removal of officer, director, or employee; suspension or
prohibition pending final order; official record
Sec. 4. (a) A notice issued under this chapter must:
(1) contain a statement of the facts constituting the alleged
practice, violation, or breach;
(2) state the facts alleged in support of the violation, practice, or
breach;
(3) state the director's intention to enter an order under section
3(a) of this chapter;
(4) be delivered to the board of directors of the financial
institution;
(5) be delivered to the officer, director, or employee concerned;
and
(6) specify the procedures that must be followed to initiate a
hearing to contest the facts alleged.
(b) If a hearing is requested within ten (10) days after service of
the written notice, the department shall hold a hearing concerning the
alleged practice, violation, or breach. The hearing shall be held not
later than forty-five (45) days after receipt of the request. The
department, based on the evidence presented at the hearing, shall
enter:
(1) a final order under section 7 of this chapter for the
immediate removal of the officer, director, or employee
affected;
(2) a final order under section 7 of this chapter prohibiting
further participation by the officer, director, or employee, in any
manner, in the conduct of affairs of any financial institution;
(3) a final order under section 7 of this chapter requiring the
financial institution and its directors, officers, employees, and
agents to:
(A) cease and desist from the practice or violation; or
(B) take affirmative action to correct the conditions resulting
from the practice or violation;
(4) a final order consisting of any combination of orders
described in subdivisions (1) through (3);
(5) a reprimand of the individuals, entities, or other persons
concerned; or
(6) a dismissal of the entire matter.
(c) If no hearing is requested within the time specified in
subsection (b), the director may proceed to issue a final order
described in subsection (b)(1), (b)(2), (b)(3), or (b)(4) on the basis of
the facts set forth in the written notice.
(d) An officer, director, or employee who is removed from a
position under a removal order that has become final may not
participate in the conduct of the affairs of any financial institution
without the approval of the director.
(e) The director may, for the protection of the financial institution
or the interests of its depositors, suspend from office or prohibit from
participation in the affairs of the financial institution an officer, a
director, or an employee of a financial institution who is the subject
of a written notice served by the director under section 3(a) of this
chapter. A suspension or prohibition under this subsection becomes
effective upon service of the notice. Unless stayed by a court in a
proceeding authorized by subsection (f), the suspension or
prohibition shall remain in effect pending completion of the
proceedings related to the written notice served under section 3(a) of
this chapter and until the effective date of an order entered by the
department under subsection (b) or the director under subsection (c).
Copies of the notice shall also be served upon the financial institution
or subsidiary of which the person is an officer, a director, or an
employee.
(f) Not more than ten (10) days after an officer, a director, or an
employee has been suspended from office or prohibited from
participation in the conduct of the affairs of the financial institution
or subsidiary under subsection (e), the officer, director, or employee
may apply to a court having jurisdiction for a stay of the suspension
or prohibition pending completion of the proceedings related to the
notice served under section 3(a) of this chapter, and the court may
stay the suspension of prohibition.
(g) The department shall maintain an official record of a
proceeding under this chapter.
As added by P.L.33-1991, SEC.56. Amended by P.L.122-1994,
SEC.109; P.L.258-2003, SEC.20; P.L.10-2006, SEC.75 and
P.L.57-2006, SEC.75; P.L.35-2010, SEC.199.
IC 28-11-4-5
Consent to a final order
Sec. 5. If the director of the department enters into a consent to a
final order under section 7 of this chapter with a financial institution,
director, officer, or employee, the director is not required to issue and
serve a notice of charges upon the financial institution, director, or
officer under section 2 or 3 of this chapter. A consent agreement may
be negotiated and entered into before or after the issuance of a notice
of charges.
As added by P.L.33-1991, SEC.56. Amended by P.L.122-1994,
SEC.110; P.L.262-1995, SEC.77; P.L.258-2003, SEC.21;
P.L.141-2005, SEC.23.
IC 28-11-4-6
Temporary order
Sec. 6. (a) If the director determines that an alleged practice, a
violation, or an act specified in a notice served under this chapter is
likely to:
(1) cause insolvency of the financial institution;
(2) cause substantial dissipation of assets or earnings of the
financial institution; or
(3) otherwise seriously prejudice the interests of the depositors
of the financial institution;
the director may issue a temporary order without a hearing.
(b) A temporary order may:
(1) require the financial institution to cease and desist from the
practice or violation;
(2) require the financial institution to take affirmative action to
correct the conditions resulting from the practice or violation; or
(3) suspend or prohibit a director, an officer, or an employee
from participating in the conduct of the affairs of the financial
institution.
(c) A temporary order is effective upon service and remains
effective and enforceable until the earliest of the following:
(1) The issuance of an injunction by a court under subsection
(d).
(2) The dismissal of the charges by the department.
(3) The effective date of a final order under section 7 of this
chapter.
(d) A financial institution served with a temporary order under this
section may apply to a court having jurisdiction for an injunction to
stay, modify, or vacate the order.
As added by P.L.33-1991, SEC.56. Amended by P.L.258-2003,
SEC.22; P.L.35-2010, SEC.200.
IC 28-11-4-7
Final order; remedies; consent presumed; confidentiality
Sec. 7. (a) If, after a hearing held under section 4(b) of this
chapter, the department finds that the conditions specified in section
2 or 3 of this chapter have been established, the department may issue
a final order. If a hearing is not requested within the time specified in
section 4(b) of this chapter, the director may issue a final order on the
basis of the facts set forth in the written notice served under section
3(a) of this chapter.
(b) Unless the director has entered into a consent agreement
described in section 5 of this chapter, a final order must include
separately stated findings of fact and conclusions of law for all
aspects of the order.
(c) A final order may do any of the following:
(1) Require the financial institution and its directors, officers,
employees, and agents to do any of the following:
(A) Cease and desist from the practice or violation.
(B) Take affirmative action to correct the conditions
resulting from the practice or violation.
(2) Suspend or prohibit a director, an officer, or an employee
from participating in the affairs of a financial institution or
subsidiary.
(3) Impose a civil penalty not to exceed the amount specified in
section 9 of this chapter.
(d) A final order shall be issued in writing within ninety (90) days
after conclusion of a hearing held under section 4(b) of this chapter,
unless this period is waived or extended with the written consent of
all parties or for good cause shown.
(e) If the financial institution, director, or officer does not appear
individually or by a duly authorized representative at a hearing held
under section 4(b) of this chapter, the financial institution, director,
or officer is considered to have consented to the issuance of a final
order.
(f) The director may keep a final order confidential if the director
determines that the immediate release of the order would endanger:
(1) the stability of the financial institution; or
(2) the security of depositors' funds.
However, after two (2) years after the date of its issuance, a final
order is no longer confidential under IC 28-1-2-30.
As added by P.L.33-1991, SEC.56. Amended by P.L.258-2003,
SEC.23; P.L.90-2008, SEC.71; P.L.35-2010, SEC.201.
IC 28-11-4-8
Final order; time in effect
Sec. 8. (a) A final order issued under this chapter is effective:
(1) on the date specified in the order; or
(2) ten (10) days after service of the order, if an effective date is
not specified in the order.
A final order issued upon consent under section 7(e) of this chapter
is effective at the time specified in the order.
(b) A final order remains effective and enforceable as provided in
the order.
(c) The department or a reviewing court may stay, modify, or
vacate a final order.
As added by P.L.33-1991, SEC.56. Amended by P.L.89-2011,
SEC.70.
IC 28-11-4-9
Civil penalty
Sec. 9. (a) A civil penalty imposed on a director or an officer
under section 7 of this chapter may not exceed one thousand dollars
($1,000) per day for each practice, violation, or act found to exist in
the final order.
(b) In determining the amount of a civil penalty assessed under
section 7 of this chapter, the following factors shall be considered:
(1) The appropriateness of the civil penalty with respect to the
financial resources and good faith of the individual charged.
(2) The gravity of the practice, violation, or act.
(3) The history of previous practices, violations, or acts.
(4) The economic benefit derived by the individual from the
practice, violation, or act.
(5) Other factors that justice requires.
(c) A financial institution may not indemnify a director or an
officer for a civil penalty imposed under section 7 of this chapter.
(d) Civil penalties shall be deposited in the financial institutions
fund established by IC 28-11-2-9.
As added by P.L.33-1991, SEC.56. Amended by P.L.89-2011,
SEC.71.
IC 28-11-4-10
Enforcement of orders, agreements, and conditions
Sec. 10. The director may enforce any of the following by
applying for appropriate relief to a court having jurisdiction:
(1) An order issued under this chapter.
(2) A written agreement entered into by the department or the
director and:
(A) a financial institution; or
(B) any director, officer, employee, or agent of the financial
institution.
(3) Any condition imposed in writing by the department or the
director on:
(A) a financial institution; or
(B) any director, officer, employee, or agent of the financial
institution;
in connection with any application, notice, or request
concerning the financial institution.
As added by P.L.33-1991, SEC.56. Amended by P.L.90-2008,
SEC.72; P.L.35-2010, SEC.202.
IC 28-11-4-11
Persons suspended or prohibited from participation
Sec. 11. An individual who:
(1) is suspended or prohibited from participating in the conduct
of the affairs of a financial institution under section 6 or 7 of
this chapter; and
(2) after the suspension or prohibition knowingly or
intentionally participates, directly or indirectly, in the
management of the financial institution;
commits a Level 6 felony.
As added by P.L.33-1991, SEC.56. Amended by P.L.35-2010,
SEC.203; P.L.158-2013, SEC.302.
IC 28-11-4-12
Enforcement powers exercised against affiliate of financial
institution
Sec. 12. (a) The director of the department may exercise the
enforcement powers of this chapter against an affiliate of a financial
institution, or against an officer, a director, or an employee of the
affiliate, as if the affiliate were a financial institution if the director
determines that a practice of the affiliate, or of the officer, director,
or employee, could cause either:
(1) the financial institution to suffer substantial loss or other
damage; or
(2) the interests of the financial institution's depositors to be
seriously prejudiced by reason of a violation, practice, or breach
of fiduciary duty.
(b) In exercising the director's enforcement powers under this
chapter against an officer, a director, or an employee of an affiliate,
the director may:
(1) remove the officer, director, or employee from the person's
office, position, or employment;
(2) prohibit any participation by the officer, director, or
employee in the conduct of the affairs of any financial
institution; or
(3) take both of the actions set forth in subdivisions (1) and (2).
(c) The director of the department may issue and serve upon the
officer, director, or employee of the affiliate a notice of charges of the
practice, violation, or act.
(d) For purposes of this section, affiliate has the meaning set forth
in IC 28-1-18.2.
As added by P.L.215-1999, SEC.8. Amended by P.L.90-2008,
SEC.73.
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