71 Pa. Stat. § 733-501

Current through P.A. Acts 2023-32

Section 733-501 - Orders by department

A. Whenever it shall appear to the department that any institution is violating any provision of its charter, or of this act, or of any other law regarding the business of such institution, or that such institution is conducting business in an unsafe or unsound manner, the department may issue a written order, under the seal of the department, directing such institution to discontinue, within such period as shall be specified in the order, such violation of law or such unsafe or unsound practice.

B. Whenever it shall appear to the department that an officer or employe of an institution, and in the case of an incorporated institution, a director or trustee thereof, has violated any law or order relating to such institution, or has engaged in any unsafe or unsound practice or breach of fiduciary duty in conducting the business of such institution, the department may issue an order directing such officer, employe, director, or trustee to appear on the day fixed in such order before the department and show cause why he should not be removed from his office or position at such institution and such office or position declared vacant. A copy of such order shall be sent to the institution of which such person is an officer, employe, director, or trustee.

The office or position of any officer, employe, director, or trustee, so ordered by the department to appear, who does not appear on the day fixed in such order, shall, unless the date for his appearance shall previously have been extended by the department, upon such failure to appear, be declared vacant.

On the day fixed in the department's order such officer, employe, director, or trustee shall be heard, in person or by counsel, by the department. If, after such hearing, it shall appear to the department that such officer, employe, director, or trustee has not shown cause why he should not be removed from his office or position at such institution and such office or position declared vacant, the department shall, within sixty days of such hearing, issue an order removing such officer, employe, director, or trustee from his office or position, and declare such office or position vacant. A copy of such order shall be sent to the officer, employe, director, or trustee so removed.

The department shall set forth in its order the date upon which any such removal and declaration of vacancy shall become effective.

The department may immediately suspend any officer, employe, director or trustee of an institution from his or her position at the institution and from any further participation in the conduct of the institution if, in the opinion of the department, the institution or its shareholders or depositors have suffered or may suffer any significant financial harm or other prejudice by the officer, employe, director or trustee ' s continued involvement in the affairs of the institution. To suspend an officer, employe, director or trustee immediately, the department shall provide a notice containing a statement of the facts constituting grounds for removal and shall state a time and place for a hearing. The hearing shall be fixed for a date between thirty days and sixty days from the date of service of notice unless an earlier or later date is set by the department at the request of the affected officer, employe, director or trustee.

If the institution, of which such person, ordered by the department to appear is an officer, employe, director, or trustee, is an interstate bank or is a member of a Federal Reserve Bank, the Federal Deposit Insurance Corporation or the Federal Home Loan Bank, the department may notify such Federal Reserve Bank, Federal Deposit Insurance Corporation, Federal Home Loan Bank, or other bank supervisory agencies having jurisdiction over an interstate bank, as the case may be, of its order directing such officer, employe, director, or trustee to appear before the department and of its decisions issued in such a case. At such hearing, any duly authorized representative of such Federal Reserve Bank, Federal Deposit Insurance Corporation, Federal Home Loan Bank or other bank supervisory agencies having jurisdiction over such interstate bank, as the case may be, may appear as a witness.

Except as otherwise specifically provided in this act, the proceedings of the department and its decisions regarding institutions shall not be published or divulged to anyone.

Any officer, employe, director, or trustee, who is removed from his office or position as provided in this section, shall thereafter be disqualified from acting as an officer, employe, director, or trustee of any institution , credit union or licensee in this Commonwealth, for such period as the department shall prescribe.

C. In connection with any hearing or investigation authorized by this act or by any other law, the department shall have, in addition to the authority provided by any other law, power to issue subpoenas, requiring the attendance of or the production of pertinent books, papers, electronic data or information of any kind in any form, by the officers, directors, agents, employes, or members, respectively, of any corporation or person which the department is authorized under the provisions of this act or any other law of this Commonwealth to examine. The department shall also have power to issue subpoenas to any person or entity provided that the information from such person or entity is necessary for the enforcement of this act or any other law within the jurisdiction of the department. The department may, upon application of the attorney, officer, employe, director, or trustee to be heard, subpoena such witnesses as are set forth in such application. The department shall also have the power to question such witnesses under oath or affirmation, and to examine such books and papers. In the event that a person fails to comply with a subpoena for documents or testimony issued by the department, the department may request an order from the Commonwealth Court requiring the person to produce the requested information.

Any witness who refuses to obey a subpoena, issued under this section, or who refuses to be sworn or affirmed or to testify, or who is guilty of any contempt, after summons to appear, may be punished as for contempt of court, and for this purpose, an application may be made to the Commonwealth Court or to any court of common pleas, within whose territorial jurisdiction the offense was committed, for which purpose such court is hereby given jurisdiction.

D. Whenever it shall appear to the department that the capital of a corporation under its supervision has been impaired, or the capital and surplus reduced below the minimum required by law or below the amount required by its articles of incorporation, the department may issue a written order, under the seal of the department, directing such corporation to make good the deficiency within such period as shall be specified in the order.

E. Whenever it shall appear to the department that the bond or securities of a person under its supervision, which are required by law to be deposited with the department, have depreciated in value so that their present value is below the minimum amount required by law, the department may issue a written order, under the seal of the department, directing such person to make good the deficiency within such period as shall be specified in the order.

F. Whenever it shall appear to the department that any institution is not keeping its books and accounts in such manner as to enable the department, with reasonable facility, to ascertain the true condition of the institution, the department may issue a written order, under the seal of the department, requiring such institution, within such period as shall be specified in the order, to open and keep such books as the department may, in its discretion, reasonably determine are essential for the purpose of keeping accurate and convenient records of the transactions and accounts of such institution.

G. Whenever any institution shall refuse to submit its records and affairs to a legally conducted examination or investigation by the department, the department may issue a written order, under its seal, requiring such institution to permit the secretary, or other duly authorized examiner, to make such examination or investigation, within such period as shall be specified in the order.

H.The department may impose a civil penalty of up to twenty-five thousand dollars ($25,000) for each violation against an institution, or any officer, employe, director or trustee of an institution, for a violation of any law or order relating to the institution or for any unsafe and unsound practice or breach of fiduciary duty in conducting the business of the institution.

71 P.S. § 733-501

Amended by P.L. 1396 2012 No. 171, § 5, eff. 12/23/2012.

1933, May 15, P.L. 565, art. V, § 501. Amended 1935, July 2, P.L. 525, § 1; 1937, April 22, P.L. 337, § 1; 1947, June 28, P.L. 1089, § 1; 1981, July 1, P.L. 178, No. 52, § 1, imd. effective; 2002, Dec. 9, P.L. 1604, No. 209, § 14, imd. effective.