2023 Texas Statutes › Finance Code › Title 3 - Financial Institutions and Businesses › Subtitle A - Banks › Chapter 35 - Enforcement Actions › Subchapter A. Enforcement Orders: Banks and Management › Section 35.003. Removal or Prohibition Order

Sec. 35.003.  REMOVAL OR PROHIBITION ORDER.  (a)  The banking commissioner has grounds to remove or prohibit a present or former officer, director, or employee of a state bank from office or employment in, or prohibit a controlling shareholder or other person participating in the affairs of a state bank from further participation in the affairs of, a state bank or any other entity chartered, registered, permitted, or licensed by the banking commissioner if the banking commissioner determines from examination or other credible evidence that:
(1)  the person:
(A)  intentionally committed or participated in the commission of an act described by Section 35.002(a) with regard to the affairs of a financial institution, as defined by Section 201.101;
(B)  violated a final cease and desist order issued by a state or federal regulatory agency against the person or an entity in which the person is or was an officer, director, or employee; or
(C)  made, or caused to be made, false entries in the records of a financial institution;
(2)  because of this action by the person:
(A)  the financial institution has suffered or will probably suffer financial loss or expense, or other damage;
(B)  the interests of the depositors, creditors, or shareholders of the financial institution have been or could be prejudiced; or
(C)  the person has received financial gain or other benefit by reason of the action, or likely would have if the action had not been discovered; and
(3)  the action:
(A)  involves personal dishonesty on the part of the person; or
(B)  demonstrates wilful or continuing disregard for the safety or soundness of the financial institution.
(b)  If the banking commissioner has grounds for action under Subsection (a) and finds that a removal or prohibition order appears to be necessary and in the best interest of the public, the banking commissioner may serve a proposed removal or prohibition order, as appropriate, on a person alleged to have committed or participated in the action.  The proposed order must:
(1)  be delivered by personal delivery or by registered or certified mail, return receipt requested;
(2)  state with reasonable certainty the grounds for removal or prohibition;
(3)  state the effective date of the order, which may not be before the 21st day after the date the proposed order is delivered or mailed; and
(4)  state the duration of the order, including whether the duration of the order is perpetual.
(b-1)  The banking commissioner may make a removal or prohibition order perpetual or effective for a specific period of time, may probate the order, or may impose other conditions on the order.
(c)  The order takes effect if the person against whom the proposed order is directed does not request a hearing in writing before the effective date.  After taking effect, the order is final and nonappealable as to that person.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.  Amended by Acts 1999, 76th Leg., ch. 344, Sec. 2.013, eff. Sept. 1, 1999.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 237 (H.B. 1962), Sec. 42, eff. September 1, 2007.
Acts 2011, 82nd Leg., R.S., Ch. 183 (S.B. 1165), Sec. 1, eff. May 28, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 940 (H.B. 1664), Sec. 9, eff. June 14, 2013.