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2000 - Rules and Regulations
{{12-30-99 p.2157}}
Subpart G—Rules and Procedures Applicable to Proceedings
Relating to Cease-and-Desist Orders
§ 308.127 Scope.
(a) Cease-and-desist proceedings under sectio 8 of the
FDIA. The rules and procedures of this subpart, subpart B of the
Local Rules and the Uniform Rules shall apply to proceedings to order
an insured nonmember bank or an institution-affiliated party to cease
and desist from practices and violations described in section 8(b) of
the FDIA, 12 U.S.C. 1818(b).
(b) Proceedings under the Securities Exchange Act of
1934. (1) The rules and procedures of this subpart, subpart B of
the Local Rules and the Uniform Rules shall apply to proceedings by the
Board of Directors to order a municipal securities dealer to cease and
desist from any violation of law or regulation specified in section
15B(c)(5) of the Securities Exchange Act, as amended
(15 U.S.C. 78o--4(c)(5)) where
the municipal securities dealer is an insured nonmember bank or a
subsidiary thereof.
(2) The rules and procedures of this subpart, subpart B of the
Local Rules and the Uniform Rules shall apply to proceedings by the
Board of Directors to order a clearing agency or transfer agent to
cease and desist from failure to comply with the applicable provisions
of section 17, 17A and 19 of the Securities Exchange Act of 1934, as
amended (15 U.S.C. 78q,
78q--1,
78s), and the applicable rules
and regulations thereunder, where the clearing agency or transfer agent
is an insured nonmember bank or a subsidiary thereof.
[Codified to 12 C.F.R. § 308.127]
[Section 308.127 amended at 64 Fed. Reg. 62100, November 16,
1999]
§ 308.128 Grounds for cease-and-desist orders.
(a) General rule. The Board of Directors or its
designee may issue and have served upon any insured nonmember bank or
an institution-affiliated party a notice, as set forth in § 308.18 of
the Uniform Rules for practices and violations as described in
§ 308.127.
(b) Extraterritorial acts of foreign banks. An act,
violation or practice committed outside the United States by a foreign
bank or an institution-affiliated party that would otherwise be a
ground for issuing a cease-and-desist order under paragraph (a) of this
section or a temporary cease-and-desist order under section 308.131 of
this subpart, shall be a ground for an order if the Board of Directors
or its designee finds that:
(1) The act, violation or practice has been, is, or is likely to
be a cause of, or carried on in connection with or in furtherance of,
an act, violation or practice committed within any state, territory, or
possession of the United States or the District of Columbia which act,
violation or practice, in and of itself, would be an appropriate basis
for action by the FDIC; or
(2) The act, violation or practice, if proven, would adversely
affect the insurance risk of the FDIC.
[Codified to 12 C.F.R.
§ 308.128]
§ 308.129 Notice to state supervisory authority.
The Board of Directors or its designee shall give the appropriate
state supervisory authority notification of its intent to institute a
proceeding pursuant to subpart G of this part, and the grounds thereof.
Any proceedings shall be conducted according to subpart G of this part,
unless, within the time period specified in such notification, the
state supervisory authority has effected satisfactory corrective
action. No insured institution or other party who is the subject of any
notice or order issued by the FDIC under this section shall have
standing to raise the requirements of this subpart as grounds for
attacking the validity of any such notice or order.
[Codified to 12 C.F.R. § 308.129]
{{12-30-99 p.2158}}
§ 308.130 Effective date of order and service on bank.
(a) Effective date. A cease-and-desist order issued by
the Board of Directors after a hearing, and a cease-and-desist order
issued based upon a default, shall become effective at the expiration
of 30 days after the service of the order upon the bank or its
official. A cease-and-desist order issued upon consent shall become
effective at the time specified therein. All cease-and-desist orders
shall remain effective and enforceable, except to the extent they are
stayed, modified, terminated, or set aside by the Board of Directors or
its designee or by a reviewing court.
(b) Service on banks. In cases where the bank is not
the respondent, the cease-and-desist order shall also be served upon
the bank.
[Codified to 12 C.F.R.
§ 308.130]
§ 308.131 Temporary cease-and-desist order.
(a) Issuance. (1) When the Board of Directors or its
designee determines that the violation, or the unsafe or unsound
practice, as specified in the notice, or the continuation thereof, is
likely to cause insolvency or significant dissipation of assets or
earnings of the bank, or is likely to weaken the condition of the bank
or otherwise prejudice the interests of its depositors prior to the
completion of the proceedings under section 8(b) of the FDIA
(12 U.S.C. 1818(b)) and
§ 308.128 of this subpart, the Board of Directors or its designee may
issue a temporary order requiring the bank or an institution-affiliated
party to immediately cease and desist from any such violation, practice
or to take affirmative action to prevent such insolvency, dissipation,
condition or prejudice pending completion of the proceedings under
section 8(b) of the FDIA (12 U.S.C. 1818(b)).
(2) When the Board of Directors or its designee issues a Notice
of charges pursuant to 12 U.S.C. 1818(b)(1) which specifies on the
basis of particular facts and circumstances that a bank's books and
records are so incomplete or inaccurate that the FDIC is unable,
through the normal supervisory process, to determine the financial
condition of the bank or the details or purpose of any transaction or
transactions that may have a material effect on the financial condition
of the bank, then the Board of Directors or its designee may issue a
temporary order requiring:
(i) The cessation of any activity or practice which gave rise,
whether in whole or in part, to the incomplete or inaccurate state of
the books or records; or
(ii) Affirmative action to restore such books or records to a
complete and accurate state, until the completion of the proceedings
under section 8(b) of the FDIA (12 U.S.C. 1818(b)).
(3) The temporary order shall be served upon the bank or the
institution-affiliated party named therein and shall also be served
upon the bank in the case where the temporary order applies only to an
institution-affiliated party.
(b) Effective date. A temporary order shall become
effective when served upon the bank or the institution-affiliated
party. Unless the temporary order is set aside, limited, or suspended
by a court in proceedings authorized under section 8(c)(2) of the FDIA
(12 U.S.C. 1818(c)(2)), the
temporary order shall remain effective and enforceable pending
completion of administrative proceedings pursuant to section 8(b) of
the FDIA (12 U.S.C. 1818(b)) and entry of an order which has become
final, or with respect to paragraph (a)(2) of this section the FDIC
determines by examination or otherwise that the bank's books and
records are accurate and reflect the financial condition of the bank.
(c) Uniform Rules do not apply. The Uniform Rules and
subpart B of the Local Rules shall not apply to the issuance of
temporary orders under this section.
[Codified to 12 C.F.R. § 308.131]
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