S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7532
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                               June 3, 2023
                                ___________
 
 Introduced  by  Sen. SANDERS -- read twice and ordered printed, and when
   printed to be committed 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 Section 41 of the banking law is REPEALED and a new section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
 DIRECTLY CONTRIBUTED TO THE FAILURE OF A COVERED ENTITY; THE SUPERINTEN-
 DENT MAY BRING AN ACTION TO REMOVE SUCH COVERED INDIVIDUAL FROM OFFICE.
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD11595-03-3
 S. 7532                             2
              

 
   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-
 INTENDENT, PARTICIPATES IN ANY MANNER IN THE  MANAGEMENT  OF  A  COVERED
 ENTITY SHALL BE GUILTY OF A MISDEMEANOR.
 S. 7532                             3
 
   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.