12 U.S.C. § 1972 — Certain tying arrangements prohibited;

Page 1277 TITLE 12—BANKS AND BANKING § 1972 Editorial Notes AMENDMENTS 1999—Pub. L. 106–102 inserted at end ‘‘For purposes of this chapter, a financial subsidiary of a national bank engaging in activities pursuant to section 24a(a) of this title shall be deemed to be a subsidiary of a bank hold- ing company, and not a subsidiary of a bank.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106–102 effective 120 days after Nov. 12, 1999, see section 161 of Pub. L. 106–102, set out as a note under section 24 of this title. § 1972. Certain tying arrangements prohibited; correspondent accounts (1) A bank shall not in any manner extend credit, lease or sell property of any kind, or fur- nish any service, or fix or vary the consideration for any of the foregoing, on the condition or re- quirement— (A) that the customer shall obtain some ad- ditional credit, property, or service from such bank other than a loan, discount, deposit, or trust service; (B) that the customer shall obtain some ad- ditional credit, property, or service from a bank holding company of such bank, or from any other subsidiary of such bank holding company; (C) that the customer provide some addi- tional credit, property, or service to such bank, other than those related to and usually provided in connection with a loan, discount, deposit, or trust service; (D) that the customer provide some addi- tional credit, property, or service to a bank holding company of such bank, or to any other subsidiary of such bank holding company; or (E) that the customer shall not obtain some other credit, property, or service from a com- petitor of such bank, a bank holding company of such bank, or any subsidiary of such bank holding company, other than a condition or requirement that such bank shall reasonably impose in a credit transaction to assure the soundness of the credit. The Board may issue such regulations as are necessary to carry out this section, and, in con- sultation with the Comptroller of the Currency and the Federal Deposit Insurance Company, may by regulation or order permit such excep- tions to the foregoing prohibition and the prohi- bitions of section 1843(f)(9) and 1843(h)(2) of this title as it considers will not be contrary to the purposes of this chapter. (2)(A) No bank which maintains a cor- respondent account in the name of another bank shall make an extension of credit to an execu- tive officer or director of, or to any person who directly or indirectly or acting through or in concert with one or more persons owns, con- trols, or has the power to vote more than 10 per centum of any class of voting securities of, such other bank or to any related interest of such person unless such extension of credit is made on substantially the same terms, including in- terest rates and collateral as those prevailing at the time for comparable transactions with other persons and does not involve more than the nor- mal risk of repayment or present other unfavor- able features. (B) No bank shall open a correspondent ac- count at another bank while such bank has out- standing an extension of credit to an executive officer or director of, or other person who di- rectly or indirectly or acting through or in con- cert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, the bank de- siring to open the account or to any related in- terest of such person, unless such extension of credit was made on substantially the same terms, including interest rates and collateral as those prevailing at the time for comparable transactions with other persons and does not in- volve more than the normal risk of repayment or present other unfavorable features. (C) No bank which maintains a correspondent account at another bank shall make an exten- sion of credit to an executive officer or director of, or to any person who directly or indirectly acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, such other bank or to any related interest of such person, unless such extension of credit is made on substantially the same terms, including interest rates and collateral as those prevailing at the time for comparable trans- actions with other persons and does not involve more than the normal risk of repayment or present other unfavorable features. (D) No bank which has outstanding an exten- sion of credit to an executive officer or director of, or to any person who directly or indirectly or acting through or in concert with one or more persons owns, controls, or has the power to vote more than 10 per centum of any class of voting securities of, another bank or to any related in- terest of such person shall open a correspondent account at such other bank, unless such exten- sion of credit was made on substantially the same terms, including interest rates and collat- eral as those prevailing at the time for com- parable transactions with other persons and does not involve more than the normal risk of repayment or present other unfavorable fea- tures. (E) For purposes of this paragraph, the term ‘‘extension of credit’’ shall have the meaning prescribed by the Board pursuant to section 375b of this title, and the term ‘‘executive officer’’ shall have the same meaning given it under sec- tion 375a of this title. (F) CIVIL MONEY PENALTY.— (i) FIRST TIER.—Any bank which, and any in- stitution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such bank who, violates any provision of this paragraph shall forfeit and pay a civil penalty of not more than $5,000 for each day during which such violation continues. (ii) SECOND TIER.—Notwithstanding clause (i), any bank which, and any institution-affili- ated party (within the meaning of section 1813(u) of this title) with respect to such bank who— (I)(aa) commits any violation described in clause (i); Page 1278 TITLE 12—BANKS AND BANKING § 1972 (bb) recklessly engages in an unsafe or un- sound practice in conducting the affairs of such bank; or (cc) breaches any fiduciary duty; (II) which violation, practice, or breach— (aa) is part of a pattern of misconduct; (bb) causes or is likely to cause more than a minimal loss to such bank; or (cc) results in pecuniary gain or other benefit to such party, shall forfeit and pay a civil penalty of not more than $25,000 for each day during which such violation, practice, or breach continues. (iii) THIRD TIER.—Notwithstanding clauses (i) and (ii), any bank which, and any institu- tion-affiliated party (within the meaning of section 1813(u) of this title) with respect to such bank who— (I) knowingly— (aa) commits any violation described in clause (i); (bb) engages in any unsafe or unsound practice in conducting the affairs of such bank; or (cc) breaches any fiduciary duty; and (II) knowingly or recklessly causes a sub- stantial loss to such bank or a substantial pecuniary gain or other benefit to such party by reason of such violation, practice, or breach, shall forfeit and pay a civil penalty in an amount not to exceed the applicable maximum amount determined under clause (iv) for each day during which such violation, practice, or breach continues. (iv) MAXIMUM AMOUNTS OF PENALTIES FOR ANY VIOLATION DESCRIBED IN CLAUSE (iii).—The maximum daily amount of any civil penalty which may be assessed pursuant to clause (iii) for any violation, practice, or breach described in such clause is— (I) in the case of any person other than a bank, an amount to not exceed $1,000,000; and (II) in the case of a bank, an amount not to exceed the lesser of— (aa) $1,000,000; or (bb) 1 percent of the total assets of such bank. (v) ASSESSMENT; ETC.—Any penalty imposed under clause (i), (ii), or (iii) may be assessed and collected— (I) in the case of a national bank, by the Comptroller of the Currency; (II) in the case of a State member bank, by the Board; and (III) in the case of an insured nonmember State bank, by the Federal Deposit Insur- ance Corporation, in the manner provided in subparagraphs (E), (F), (G), and (I) of section 1818(i)(2) of this title for penalties imposed (under such section) and any such assessment shall be subject to the provisions of such section. (vi) HEARING.—The bank or other person against whom any penalty is assessed under this subparagraph shall be afforded an agency hearing if such bank or person submits a re- quest for such hearing within 20 days after the issuance of the notice of assessment. Section 1818(h) of this title shall apply to any pro- ceeding under this subparagraph. (vii) DISBURSEMENT.—All penalties collected under authority of this subsection shall be de- posited into the Treasury. (viii) ‘‘VIOLATE’’ DEFINED.—For purposes of this paragraph, the term ‘‘violate’’ includes any action (alone or with another or others) for or toward causing, bringing about, partici- pating in, counseling, or aiding or abetting a violation. (ix) REGULATIONS.—The Comptroller of the Currency, the Board, and the Federal Deposit Insurance Corporation shall prescribe regula- tions establishing such procedures as may be necessary to carry out this subparagraph. (G) For the purpose of this paragraph— (i) the term ‘‘bank’’ includes a mutual sav- ings bank, a savings bank, and a savings asso- ciation (as those terms are defined in section 1813 of this title); (ii) the term ‘‘related interests of such per- sons’’ includes any company controlled by such executive officer, director, or person, or any political or campaign committee the funds or services of which will benefit such ex- ecutive officer, director, or person or which is controlled by such executive officer, director, or person; and (iii) the terms ‘‘control of a company’’ and ‘‘company’’ have the same meaning as under section 375b of this title. (H) NOTICE UNDER THIS SECTION AFTER SEPA- RATION FROM SERVICE.—The resignation, termi- nation of employment or participation, or sepa- ration of an institution-affiliated party (within the meaning of section 1813(u) of this title) with respect to such a bank (including a separation caused by the closing of such a bank) shall not affect the jurisdiction and authority of the ap- propriate Federal banking agency to issue any notice and proceed under this section against any such party, if such notice is served before the end of the 6-year period beginning on the date such party ceased to be such a party with respect to such bank (whether such date occurs before, on, or after August 9, 1989). (Pub. L. 91–607, title I, § 106(b), Dec. 31, 1970, 84 Stat. 1766; Pub. L. 95–630, title VIII, § 801, Nov. 10, 1978, 92 Stat. 3690; Pub. L. 97–320, title IV, §§ 410(f), 424(c), (d)(11), (e), 428, Oct. 15, 1982, 96 Stat. 1520, 1523, 1526; Pub. L. 101–73, title IX, §§ 905(h), 907(i), Aug. 9, 1989, 103 Stat. 461, 473; Pub. L. 102–242, title III, § 306(j), Dec. 19, 1991, 105 Stat. 2359; Pub. L. 104–208, div. A, title II, § 2216(a), Sept. 30, 1996, 110 Stat. 3009–413; Pub. L. 109–351, title VI, § 601(b), Oct. 13, 2006, 120 Stat. 1978; Pub. L. 111–203, title III, § 355, July 21, 2010, 124 Stat. 1547.) Editorial Notes AMENDMENTS 2010—Par. (1). Pub. L. 111–203 inserted ‘‘issue such reg- ulations as are necessary to carry out this section, and, in consultation with the Comptroller of the Currency and the Federal Deposit Insurance Company, may’’ after ‘‘The Board may’’ in concluding provisions. 2006—Par. (2)(G) to (I). Pub. L. 109–351 redesignated subpars. (H) and (I) as (G) and (H), respectively, and Page 1279 TITLE 12—BANKS AND BANKING § 1975 struck out former subpar. (G) which related to written reporting requirements relating to bank loans to exec- utive officers or stockholders with power to vote more than 10 per centum of any class of voting securities of an insured bank. 1996—Par. (1). Pub. L. 104–208, in concluding provi- sions, inserted ‘‘and the prohibitions of section 1843(f)(9) and 1843(h)(2) of this title’’ after ‘‘prohibi- tion’’. 1991—Par. (2)(H)(i). Pub. L. 102–242 inserted before semicolon at end ‘‘, a savings bank, and a savings asso- ciation (as those terms are defined in section 1813 of this title)’’. 1989—Par. (2)(F). Pub. L. 101–73, § 907(i), amended sub- par. (F) generally, revising and restating as cls. (i) to (ix) provisions of former cls. (i) to (vii). Par. (2)(I). Pub. L. 101–73, § 905(h), added subpar. (I). 1982—Par. (2)(A) to (D). Pub. L. 97–320, § 428(a)(1)–(4), inserted ‘‘or to any related interest of such person’’ after ‘‘such other bank’’ in subpar. (A), ‘‘desiring to open the account’’ in subpar. (B), ‘‘such other bank’’ in subpar. (C), and ‘‘another bank’’ in subpar. (D). Par. (2)(E). Pub. L. 97–320, § 410(f), substituted ‘‘the meaning prescribed by the Board pursuant to section 375b of this title’’ for ‘‘the same meaning given it in section 371c of this title’’. Par. (2)(F)(i). Pub. L. 97–320, § 424(c), (d)(11), inserted proviso giving agency discretionary authority to com- promise, etc., any civil money penalty imposed under such authority, and substituted ‘‘may be assessed’’ for ‘‘shall be assessed’’. Par. (2)(F)(iv). Pub. L. 97–320, § 424(e), substituted ‘‘twenty days from the service’’ for ‘‘ten days from the date’’. Par. (2)(G)(ii). Pub. L. 97–320, § 428(b)(1), substituted ‘‘(ii) The appropriate Federal banking agencies are au- thorized to issue rules and regulations, including defi- nitions of terms, to require the reporting and public disclosure of information by any bank or executive offi- cer or principal shareholder thereof concerning any ex- tension of credit by a correspondent bank to the report- ing bank’s executive officers or principal shareholders, or the related interests of such persons.’’ for ‘‘(ii) Each insured bank shall compile the reports filed pursuant to subparagraph (G)(i) and forward such compilation to the Comptroller of the Currency in the case of a na- tional bank, the Board in the case of a State member bank, and the Federal Deposit Insurance Corporation in the case of an insured nonmember State bank.’’ Par. (2)(G)(iii). Pub. L. 97–320, § 428(b)(2), struck out cl. (iii) which required insured banks to include in their section 1817(k)(1) report a list of names of executive of- ficers or stockholders of record owning, controlling, or having more than a 10 per centum voting control of any class of voting securities of the bank who file informa- tion required by subpar. (G)(i) and aggregate amount of extensions of credit by correspondent banks to such ex- ecutive officers or stockholders of record, any company controlled by such persons, and any political or cam- paign committee the funds or services of which will benefit such persons, or which is controlled by such persons. Par. (2)(H). Pub. L. 97–320, § 428(c), added subpar. (H). 1978—Pub. L. 95–630 designated existing provisions as par. (1), redesignated former pars. (1) to (5) as subpars. (A) to (E), and added par. (2). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–203 effective on the trans- fer date, see section 351 of Pub. L. 111–203, set out as a note under section 906 of Title 2, The Congress. EFFECTIVE DATE OF 1991 AMENDMENT Amendment by Pub. L. 102–242 effective upon earlier of date on which final regulations under section 306(m)(1) of Pub. L. 102–242 become effective or 150 days after Dec. 19, 1991, see section 306(l) of Pub. L. 102–242, set out as a note under section 375b of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 907(i) of Pub. L. 101–73 applica- ble to conduct engaged in after Aug. 9, 1989, except that increased maximum penalties of $5,000 and $25,000 may apply to conduct engaged in before such date if such conduct is not already subject to a notice issued by the appropriate agency and occurred after completion of the last report of the examination of the institution by the appropriate agency occurring before Aug. 9, 1989, see section 907(l) of Pub. L. 101–73, set out as a note under section 93 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Amendment by section 428(b) of Pub. L. 97–320 effec- tive when regulations referred to in the amendment be- come effective as provided in section 430 of Pub. L. 97–320, set out as a note under section 1817 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–630 effective on expiration of 120 days after Nov. 10, 1978, see section 2101 of Pub. L. 95–630, set out as an Effective Date note under sec- tion 375b of this title. § 1973. Jurisdiction of courts; duty of United States attorneys; equitable proceedings; peti- tion; expedition of cases; temporary restrain- ing orders; bringing in additional parties; subpenas The district courts of the United States have jurisdiction to prevent and restrain violations of section 1972 of this title and it is the duty of the United States attorneys, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such viola- tions. The proceedings may be by way of a peti- tion setting forth the case and praying that the violation be enjoined or otherwise prohibited. When the parties complained of have been duly notified of the petition, the court shall proceed, as soon as possible, to the hearing and deter- mination of the case. While the petition is pend- ing, and before final decree, the court may at any time make such temporary restraining order or prohibition as it deems just. Whenever it appears to the court that the ends of justice require that other parties be brought before it, the court may cause them to be summoned whether or not they reside in the district in which the court is held, and subpenas to that end may be served in any district by the mar- shal thereof. (Pub. L. 91–607, title I, § 106(c), Dec. 31, 1970, 84 Stat. 1767.) § 1974. Actions by United States; subpenas for witnesses In any action brought by or on behalf of the United States under section 1972 of this title, subpenas for witnesses may run into any dis- trict, but no writ of subpena may issue for wit- nesses living out of the district in which the court is held at a greater distance than one hun- dred miles from the place of holding the same without the prior permission of the trial court upon proper application and cause shown. (Pub. L. 91–607, title I, § 106(d), Dec. 31, 1970, 84 Stat. 1767.) § 1975. Civil actions by persons injured; jurisdic- tion and venue; amount of recovery Any person who is injured in his business or property by reason of anything forbidden in sec-