§4636 — Title 12 Banks and Banking | U.S. Code

Summary

The Director may order money penalties against a regulated entity (the firm being watched) or an entity-affiliated party (people connected to the firm). The Director cannot use this rule for violations covered under section 4585(a). A basic penalty can be up to $10,000 for each day a violation continues for breaking chapter rules, orders, conditions, or written agreements. Higher penalties—up to $50,000 per day—apply if the wrong conduct is reckless, breaks a duty, or is part of a pattern and causes more than a small loss or a benefit. The largest penalty applies when the person or firm knowingly breaks the rules and causes substantial loss or gain: up to $2,000,000 per day for either an entity or an affiliated party. The Director must have written rules for how penalties work. The firm or person must be told in writing and given a hearing on the record under section 4633. The Director will consider things like how serious the violation was, past problems, harm to the public, gains received, and deterrence. Orders generally cannot be reviewed except as allowed in section 4634. If the penalty order is final and not paid, the Director can sue in U.S. District Court in D.C. or where the firm’s headquarters is to get a money judgment. The Director can reduce or cancel penalties, penalties are in addition to other remedies, firms may not pay back individuals for penalties under the knowing-conduct rule, collected penalties go to the U.S. Treasury general fund, and penalties apply only to conduct after October 28, 1992.

Title 12, §4636

Banks and Banking — Source: USLM XML via OLRC

(a)The Director may impose a civil money penalty in accordance with this section on any regulated entity or any entity-affiliated party. The Director shall not impose a civil penalty in accordance with this section on any regulated entity or any entity-affiliated party for any violation that is addressed under section 4585(a) of this title.

(b)(1)A regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $10,000 for each day during which a violation continues, if such regulated entity or party—

(A)violates any provision of this chapter, the authorizing statutes, or any order, condition, rule, or regulation under this chapter or any authorizing statute;

(B)violates any final or temporary order or notice issued pursuant to this chapter;

(C)violates any condition imposed in writing by the Director in connection with the grant of any application or other request by such regulated entity; or

(D)violates any written agreement between the regulated entity and the Director.

(2)Notwithstanding paragraph (1), a regulated entity or entity-affiliated party shall forfeit and pay a civil penalty of not more than $50,000 for each day during which a violation, practice, or breach continues, if—

(A)the regulated entity or entity-affiliated party, respectively—

(i)commits any violation described in any subparagraph of paragraph (1);

(ii)recklessly engages in an unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii)breaches any fiduciary duty; and

(B)the violation, practice, or breach—

(i)is part of a pattern of misconduct;

(ii)causes or is likely to cause more than a minimal loss to the regulated entity; or

(iii)results in pecuniary gain or other benefit to such party.

(3)Notwithstanding paragraphs (1) and (2), any regulated entity or entity-affiliated party shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under paragraph (4) for each day during which such violation, practice, or breach continues, if such regulated entity or entity-affiliated party—

(A)knowingly—

(i)commits any violation described in any subparagraph of paragraph (1);

(ii)engages in any unsafe or unsound practice in conducting the affairs of the regulated entity; or

(iii)breaches any fiduciary duty; and

(B)knowingly or recklessly causes a substantial loss to the regulated entity or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach.

(4)The maximum daily amount of any civil penalty which may be assessed pursuant to paragraph (3) for any violation, practice, or breach described in paragraph (3) is—

(A)in the case of any entity-affiliated party, an amount not to exceed $2,000,000; and

(B)in the case of any regulated entity, $2,000,000.

(c)(1)The Director shall establish standards and procedures governing the imposition of civil money penalties under subsections (a) and (b). Such standards and procedures—

(A)shall provide for the Director to notify the regulated entity or entity-affiliated party in writing of the Director’s determination to impose the penalty, which shall be made on the record;

(B)shall provide for the imposition of a penalty only after the regulated entity, executive officer, or director or entity-affiliated party has been given an opportunity for a hearing on the record pursuant to section 4633 of this title; and

(C)may provide for review by the Director of any determination or order, or interlocutory ruling, arising from a hearing.

(2)In determining the amount of a penalty under this section, the Director shall give consideration to such factors as the gravity of the violation, any history of prior violations, the effect of the penalty on the safety and soundness of the regulated entity, any injury to the public, any benefits received, and deterrence of future violations, and any other factors the Director may determine by regulation to be appropriate.

(3)The order of the Director imposing a penalty under this section shall not be subject to review, except as provided in section 4634 of this title.

(d)If a regulated entity, executive officer, director, or entity-affiliated party fails to comply with an order of the Director imposing a civil money penalty under this section, after the order is no longer subject to review as provided under subsection (c)(1), the Director may bring an action in the United States District Court for the District of Columbia, or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located, to obtain a monetary judgment against the regulated entity, executive officer, director, or entity-affiliated party and such other relief as may be available. The monetary judgment may, in the discretion of the court, include any attorneys fees and other expenses incurred by the United States in connection with the action. In an action under this subsection, the validity and appropriateness of the order of the Director imposing the penalty shall not be subject to review.

(e)The Director may compromise, modify, or remit any civil money penalty which may be, or has been, imposed under this section.

(f)Any civil money penalty under this section shall be in addition to any other available civil remedy and may be imposed whether or not the Director imposes other administrative sanctions.

(g)A regulated entity may not reimburse or indemnify any individual for any penalty imposed under subsection (b)(3).

(h)The Director shall deposit any civil money penalties collected under this section into the general fund of the Treasury.

(i)A penalty under this section may be imposed only for conduct or violations under subsection (a) occurring after October 28, 1992.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in subsec. (b)(1)(A), (B), was in the original “this title”, meaning title XIII of Pub. L. 102–550, Oct. 28, 1992, 106 Stat. 3941, which is classified principally to this chapter. For complete classification of title XIII to the Code, see

Short Title

note set out under section 4501 of this title and Tables.

Amendments

2008—Subsec. (a). Pub. L. 110–289, § 1155(1), added subsec. (a) and struck out former subsec. (a) which related to violations or conduct for which the Director could impose a civil money penalty in accordance with this section. Subsec. (b). Pub. L. 110–289, § 1155(2), added subsec. (b) and struck out former subsec. (b) which related to the amount of penalty the Director could impose for violations or conduct described in former subsection (a). Subsec. (c)(1)(A). Pub. L. 110–289, § 1155(3)(A), (B), substituted “regulated entity” for “enterprise” and inserted “or entity-affiliated party” before “in writing”. Subsec. (c)(1)(B). Pub. L. 110–289, § 1155(3)(A), (C), substituted “regulated entity” for “enterprise” and inserted “or entity-affiliated party” before “has been given”. Subsec. (c)(2). Pub. L. 110–289, § 1155(3)(A), substituted “regulated entity” for “enterprise”. Subsec. (d). Pub. L. 110–289, § 1155(4)(G), struck out “and section 4634 of this title” after “subsection (c)(1)”. Pub. L. 110–289, § 1155(4)(F), which directed the striking out of “, or may, under the direction and control of the Attorney General of the United States, bring such an action”, was executed by striking out “, or may, under the direction and control of the Attorney General, bring such an action” after “may be available”, to reflect the probable intent of Congress. Pub. L. 110–289, § 1155(4)(A)–(E), substituted “director, or entity-affiliated party” for “or director” in two places, “a regulated entity” for “an enterprise”, and “the regulated entity” for “the enterprise”, inserted “, or the United States district court within the jurisdiction of which the headquarters of the regulated entity is located,” after “District of Columbia”, and struck out “request the Attorney General of the United States to” after “Director may”. Subsec. (g). Pub. L. 110–289, § 1155(5), substituted “A regulated entity” for “An enterprise”.

§4636 Civil Money Penalties