S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  7428--A
 
                        2023-2024 Regular Sessions
 
                           I N  A S S E M B L Y
 
                               May 19, 2023
                                ___________
 
 Introduced by M. of A. HUNTER -- read once and referred to the Committee
   on  Banks  -- reported and referred to the Committee on Rules -- Rules
   Committee discharged, bill amended, ordered reprinted as  amended  and
   recommitted to the Committee on Rules
 
 AN  ACT to amend the banking law, in relation to removal and prohibition
   of directors, trustees, officers, members or partners of certain enti-
   ties; and to repeal certain provisions of such law related thereto
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section 1. Section 41 of the banking law is REPEALED and a new section
 41 is added to read as follows:
   §  41.  REMOVAL  AND  PROHIBITION.  1. GROUNDS FOR ENFORCEMENT ACTION.
 WHENEVER THE SUPERINTENDENT HAS REASON TO  BELIEVE  THAT  ANY  DIRECTOR,
 TRUSTEE,  OFFICER, MEMBER OR PARTNER, OR, IN THE CASE OF A FOREIGN BANK-
 ING CORPORATION, THE PERSON IN CHARGE, OR AN OFFICER,  OF  A  BRANCH  OR
 AGENCY  (FOR  PURPOSES OF THIS SECTION, EACH A "COVERED INDIVIDUAL"), OF
 ANY BANK, TRUST COMPANY, LIMITED PURPOSE TRUST  COMPANY,  PRIVATE  BANK,
 SAVINGS BANK, SAFE DEPOSIT COMPANY, SAVINGS AND LOAN ASSOCIATION, CREDIT
 UNION, INVESTMENT COMPANY, BANK HOLDING COMPANY (AS SUCH TERM IS DEFINED
 IN  ARTICLE  THREE-A  OF  THIS  CHAPTER),  FOREIGN  BANKING CORPORATION,
 LICENSED LENDER, LICENSED CASHER OF  CHECKS,  BUDGET  PLANNER,  MORTGAGE
 BANKER, MORTGAGE LOAN SERVICER, MORTGAGE BROKER, LICENSED TRANSMITTER OF
 MONEY  OR  STUDENT  LOAN  SERVICER (FOR PURPOSES OF THIS SECTION, EACH A
 "COVERED ENTITY") HAS, DIRECTLY OR INDIRECTLY: (A) CAUSED,  FACILITATED,
 PERMITTED  OR PARTICIPATED IN ANY VIOLATION BY A COVERED ENTITY OF A LAW
 OR REGULATION, ORDER ISSUED BY THE SUPERINTENDENT OR ANY WRITTEN  AGREE-
 MENT  BETWEEN  SUCH  COVERED ENTITY OR COVERED INDIVIDUAL AND THE SUPER-
 INTENDENT; (B) ENGAGED OR PARTICIPATED IN ANY UNSAFE OR UNSOUND PRACTICE
 IN CONNECTION WITH ANY COVERED ENTITY; OR (C) ENGAGED OR PARTICIPATED IN
 ANY WILLFUL MATERIAL ACT OR  OMITTED  TO  TAKE  ANY  MATERIAL  ACT  THAT
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11595-02-3
 A. 7428--A                          2
              

 
 DIRECTLY CONTRIBUTED TO THE FAILURE OF A COVERED ENTITY; THE SUPERINTEN-
 DENT MAY BRING AN ACTION TO REMOVE SUCH COVERED INDIVIDUAL FROM OFFICE.
   2.  NOTICE  AND HEARING. (A) WHENEVER THE SUPERINTENDENT HAS REASON TO
 BELIEVE THAT ANY GROUNDS EXIST  TO  REMOVE  A  COVERED  INDIVIDUAL,  THE
 SUPERINTENDENT MAY SERVE A STATEMENT OF THE CHARGES AGAINST SUCH COVERED
 INDIVIDUAL,  EITHER  PERSONALLY  OR, UPON A FINDING THAT SUCH INDIVIDUAL
 CANNOT BE SERVED PERSONALLY WITHIN THIS STATE, BY REGISTERED MAIL AT THE
 LAST ADDRESS OF SUCH INDIVIDUAL SHOWN ON THE DEPARTMENT'S RECORDS, AND A
 NOTICE OF AN OPPORTUNITY TO APPEAR BEFORE  THE  SUPERINTENDENT  TO  SHOW
 CAUSE  WHY SUCH COVERED INDIVIDUAL SHOULD NOT BE REMOVED FROM OFFICE.  A
 COPY OF SUCH NOTICE SHALL ALSO BE SENT TO ANY AFFECTED COVERED ENTITY.
   (B) IF AFTER NOTICE AND A HEARING, THE SUPERINTENDENT FINDS  THAT  THE
 COVERED  INDIVIDUAL  HAS ENGAGED IN CONDUCT DESCRIBED IN SUBDIVISION ONE
 OF THIS SECTION, OR IF SUCH COVERED  INDIVIDUAL  WAIVES  A  HEARING,  OR
 FAILS TO APPEAR IN PERSON OR BY A DULY AUTHORIZED REPRESENTATIVE WITHOUT
 GOOD  CAUSE  SHOWN AT THE TIME AND PLACE SET FOR THE HEARING, THE SUPER-
 INTENDENT MAY ISSUE AN ORDER REMOVING THE COVERED INDIVIDUAL FROM OFFICE
 AND PROHIBITING THE COVERED INDIVIDUAL'S EMPLOYMENT OR  THE  PERFORMANCE
 OF ANY CONTRACTUAL AGREEMENTS WITH ANY COVERED ENTITY.
   (C)  SUCH  ORDER AND THE FINDINGS OF FACT UPON WHICH IT IS BASED SHALL
 BE EFFECTIVE UPON SERVICE ON SUCH COVERED INDIVIDUAL PERSONALLY OR, UPON
 A FINDING THAT SUCH INDIVIDUAL CANNOT BE SERVED PERSONALLY  WITHIN  THIS
 STATE,  BY  REGISTERED  MAIL, AND MAY NOT BE MADE PUBLIC OR DISCLOSED TO
 ANYONE, EXCEPT AS PROVIDED IN SUBDIVISION TEN OF SECTION  THIRTY-SIX  OF
 THIS  ARTICLE  OR IN CONNECTION WITH PROCEEDINGS RELATING TO A VIOLATION
 OF THIS SECTION.   SUCH ORDER SHALL ALSO BE  SERVED  UPON  ANY  AFFECTED
 COVERED  ENTITY  SERVED  WITH THE STATEMENT OF CHARGES IN THE PROCEEDING
 RESULTING IN THE ORDER. ANY SUCH ORDER SHALL REMAIN IN EFFECT, UNLESS IT
 IS AMENDED OR RESCINDED BY THE SUPERINTENDENT OR A  COURT  OF  COMPETENT
 JURISDICTION,  OR  REPLACED  BY  AN ORDER ISSUED PURSUANT TO SUBDIVISION
 THREE OF THIS SECTION.
   (D) TO THE EXTENT CONSISTENT WITH THE REQUIREMENTS IN THIS SECTION,  A
 PROCEEDING TO REMOVE A COVERED INDIVIDUAL PURSUANT TO THIS SECTION SHALL
 BE CONDUCTED IN ACCORDANCE WITH THE REQUIREMENTS OF ARTICLE THREE OF THE
 FINANCIAL SERVICES LAW AND REGULATIONS PROMULGATED PURSUANT THERETO.
   3.  SUSPENSION  PENDING DETERMINATION OF CHARGES. UPON, OR AT ANY TIME
 AFTER SERVICE OF WRITTEN NOTICE PURSUANT  TO  SUBDIVISION  TWO  OF  THIS
 SECTION,  THE  SUPERINTENDENT  MAY SUSPEND, PENDING THE DETERMINATION OF
 THE CHARGES, A COVERED INDIVIDUAL FROM OFFICE OR PROHIBIT SUCH  INDIVID-
 UAL  FROM  PARTICIPATING  IN ANY MANNER IN THE CONDUCT OF THE AFFAIRS OF
 ANY COVERED ENTITY FOR A PERIOD OF UP TO ONE HUNDRED EIGHTY DAYS IF  THE
 SUPERINTENDENT  HAS  REASON  TO  BELIEVE  THAT  BY REASON OF THE CONDUCT
 DESCRIBED IN SUBDIVISION ONE OF THIS SECTION: (A) A COVERED  ENTITY  HAS
 SUFFERED OR WILL PROBABLY SUFFER FINANCIAL LOSS THAT IMPACTS ITS ABILITY
 TO  OPERATE  IN A SAFE AND SOUND MANNER; (B) THE INTERESTS OF THE DEPOS-
 ITORS AT A COVERED ENTITY HAVE BEEN OR COULD BE PREJUDICED; OR  (C)  THE
 COVERED  INDIVIDUAL  DEMONSTRATES  WILLFUL  DISREGARD FOR THE SAFETY AND
 SOUNDNESS OF A COVERED ENTITY. THE SUPERINTENDENT MAY EXTEND THE SUSPEN-
 SION FOR ADDITIONAL PERIODS OF UP TO ONE  HUNDRED  EIGHTY  DAYS  IF  THE
 HEARING  IS  NOT COMPLETED WITHIN THE PRIOR SUSPENSION PERIOD DUE TO THE
 REQUEST OF THE COVERED INDIVIDUAL.
   4. EFFECT OF ORDER FOR REMOVAL OR SUSPENSION.  ANY COVERED  INDIVIDUAL
 SUBJECT  TO AN ORDER ISSUED PURSUANT TO THIS SECTION SHALL BE PROHIBITED
 FROM PARTICIPATING, IN ANY MANNER, IN THE CONDUCT OF THE AFFAIRS OF  ANY
 COVERED  ENTITY  UNLESS PERMITTED TO, IN WRITING, BY THE SUPERINTENDENT.
 ANY COVERED INDIVIDUAL WHO THEREAFTER, WITHOUT PERMISSION OF THE  SUPER-
 A. 7428--A                          3
 
 INTENDENT,  PARTICIPATES  IN  ANY  MANNER IN THE MANAGEMENT OF A COVERED
 ENTITY SHALL BE GUILTY OF A MISDEMEANOR.
   5.  MANNER OF REVIEW. ANY ORDER ISSUED PURSUANT TO THIS SECTION MAY BE
 REVIEWED IN THE MANNER PROVIDED BY ARTICLE SEVENTY-EIGHT  OF  THE  CIVIL
 PRACTICE LAW AND RULES.
   § 2. This act shall take effect immediately.