12 U.S.C. § 2262 — Temporary cease and desist orders

Page 1363 TITLE 12—BANKS AND BANKING § 2262 bonds, debentures, and other obligations under this chapter. (Pub. L. 92–181, title V, § 5.24, formerly § 5.25, Dec. 10, 1971, 85 Stat. 624; renumbered § 5.24, Pub. L. 99–205, title II, § 203(b), Dec. 23, 1985, 99 Stat. 1694.) Editorial Notes PRIOR PROVISIONS A prior section 5.24 of Pub. L. 92–181 was renumbered section 5.23 and is classified to section 2258 of this title. § 2260. Transferred Editorial Notes CODIFICATION Section, Pub. L. 92–181, title V, § 5.30, as added Pub. L. 96–592, title V, § 509, Dec. 24, 1980, 94 Stat. 3450, which re- lated to audit and report to Congress by the Comp- troller General, was renumbered section 5.44 of Pub. L. 92–181 by Pub. L. 99–205, title II, § 205(a)(2), Dec. 23, 1985, 99 Stat. 1703, transferred to section 2275 of this title, and repealed by Pub. L. 115–334, title V, § 5411(36), Dec. 20, 2018, 132 Stat. 4683. PART C—ENFORCEMENT POWERS OF FARM CREDIT ADMINISTRATION § 2261. Cease and desist proceedings (a) If, in the opinion of the Farm Credit Ad- ministration, any institution in the Farm Credit System, or any director, officer, employee, agent, or other person participating in the con- duct of the affairs of such an institution is en- gaging or has engaged, or the Farm Credit Ad- ministration has reasonable cause to believe that the institution or any director, officer, em- ployee, agent, or other person participating in the conduct of the affairs of such institution is about to engage, in an unsafe or unsound prac- tice in conducting the business of such institu- tion, or is violating or has violated, or the Farm Credit Administration has reasonable cause to believe that the institution or any director, offi- cer, employee, agent, or other person partici- pating in the conduct of the affairs of such insti- tution is about to violate, a law, rule, or regula- tion, or any condition imposed in writing by the Farm Credit Administration in connection with the granting of any application or other request by the institution or any written agreement en- tered into with the Farm Credit Administration, the Farm Credit Administration may issue and serve upon the institution or such director, offi- cer, employee, agent, or other person a notice of charges in respect thereof. The notice shall con- tain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and de- sist therefrom should issue against the institu- tion or the director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after service of such notice unless an earlier or a later date is set by the Farm Credit Administration at the request of any party so served. Unless the party or parties so served shall appear at the hearing personally or by a duly authorized representative, they shall be deemed to have consented to the issuance of the cease and desist order. In the event of such consent, or if upon the record made at any such hearing, the Farm Credit Ad- ministration shall find that any violation or un- safe or unsound practice specified in the notice of charges has been established, the Farm Credit Administration may issue and serve upon the in- stitution or the director, officer, employee, agent, or other person participating in the con- duct of the affairs of such institution an order to cease and desist from any such violation or practice. Such order may, by provisions that may be mandatory or otherwise, require the in- stitution or its directors, officers, employees, agents, and other persons participating in the conduct of the affairs of such institution to cease and desist from the same, and, further, to take affirmative action to correct the condi- tions resulting from any such violation or prac- tice. (b) A cease and desist order shall become effec- tive at the expiration of thirty days after the service of such order upon the institution or other person concerned (except in the case of a cease and desist order issued upon consent, which shall become effective at the time speci- fied therein), and shall remain effective and en- forceable as provided therein except to such ex- tent as it is stayed, modified, terminated, or set aside by action of the Farm Credit Administra- tion or a reviewing court. (Pub. L. 92–181, title V, § 5.25, as added Pub. L. 99–205, title II, § 204, Dec. 23, 1985, 99 Stat. 1694.) Editorial Notes PRIOR PROVISIONS A prior section 5.25 of Pub. L. 92–181 was renumbered section 5.24 and is classified to section 2259 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as an Effective Date of 1985 Amendment note under section 2001 of this title. § 2262. Temporary cease and desist orders (a) Whenever the Farm Credit Administration shall determine that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the institution or any director, offi- cer, employee, agent, or other person partici- pating in the conduct of the affairs of such insti- tution under section 2261 of this title, or the continuation thereof, is likely to cause insol- vency or substantial dissipation of assets or earnings of the institution, or is likely to seri- ously weaken the condition of the institution or otherwise seriously prejudice the interests of the investors in Farm Credit System obligations or shareholders in the institution prior to the completion of the proceedings conducted under section 2261 of this title, the Farm Credit Ad- ministration may issue a temporary order re- quiring the institution or such director, officer, Page 1364 TITLE 12—BANKS AND BANKING § 2263 employee, agent, or other person to cease and desist from any such violation or practice and to take affirmative action to prevent such insol- vency, dissipation, condition, or prejudice pend- ing completion of such proceedings. Such order shall become effective upon service upon the in- stitution or such director, officer, employee, agent, or other person participating in the con- duct of the affairs of such institution and, unless set aside, limited, or suspended by a court in proceedings authorized by subsection (b), shall remain effective and enforceable pending the completion of the administrative proceedings pursuant to such notice and until such time as the Farm Credit Administration shall dismiss the charges specified in such notice, or if a cease and desist order is issued against the institution or such director, officer, employee, agent, or other person, until effective date of such order. (b) Within ten days after the institution con- cerned or any director, officer, employee, agent, or other person participating in the conduct of the affairs of such institution has been served with a temporary cease and desist order, the in- stitution or such director, officer, employee, agent, or other person may apply to the United States district court for the judicial district in which the home office of the institution is lo- cated, or the United States district court for the District of Columbia, for an injunction setting aside, limiting, or suspending the enforcement, operation, or effectiveness of such order pending the completion of the administrative pro- ceedings pursuant to the notice of charges served upon the institution or such director, of- ficer, employee, agent, or other person under section 2261 of this title, and such court shall have jurisdiction to issue such injunction. (Pub. L. 92–181, title V, § 5.26, as added Pub. L. 99–205, title II, § 204, Dec. 23, 1985, 99 Stat. 1695.) Editorial Notes PRIOR PROVISIONS A prior section 5.26 of Pub. L. 92–181 was renumbered section 5.40 and is set out in part as notes under section 2001 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as an Effective Date of 1985 Amendment note under section 2001 of this title. § 2263. Enforcement of temporary cease and de- sist orders In the case of violation or threatened viola- tion of, or failure to obey, a temporary cease and desist order issued under section 2262 of this title, the Farm Credit Administration may apply to the United States district court, or the United States court of any territory, within the jurisdiction of which the home office of the in- stitution is located, for an injunction to enforce such order, and, if the court shall determine that there has been such violation or threatened violation or failure to obey, it shall be the duty of the court to issue such injunction. (Pub. L. 92–181, title V, § 5.27, as added Pub. L. 99–205, title II, § 204, Dec. 23, 1985, 99 Stat. 1696.) Editorial Notes PRIOR PROVISIONS A prior section 5.27 of Pub. L. 92–181, which amended section 393 of this title and sections 5314 and 5315 of Title 5, Government Organization and Employees, was renumbered section 5.41. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective thirty days after Dec. 23, 1985, see section 401 of Pub. L. 99–205, set out as an Effective Date of 1985 Amendment note under section 2001 of this title. § 2264. Suspension or removal of director or offi- cer (a) Written notice of intention to remove; viola- tion of law, rule, regulation, or final cease and desist order; unsafe or unsound practice; breach of fiduciary duty Whenever, in the opinion of the Farm Credit Administration, any director or officer of any institution in the Farm Credit System has com- mitted any violation of law, rule, or regulation or of a cease and desist order that has become final, or has engaged or participated in any un- safe or unsound practice in connection with the institution, or has committed or engaged in any act, omission, or practice which constitutes a breach of a fiduciary duty as such director or of- ficer, and the Farm Credit Administration de- termines that the institution has suffered or will probably suffer substantial financial loss or other damage or that the interests of its share- holders or investors in Farm Credit System obli- gations could be seriously prejudiced by reason of such violation or practice or breach of fidu- ciary duty, or that the director or officer has re- ceived financial gain by reason of such violation or practice or breach of fiduciary duty, and that such violation or practice or breach of fiduciary duty is one involving personal dishonesty on the part of such director or officer, or one that dem- onstrates a willful or continuing disregard for the safety or soundness of the System institu- tion, the Farm Credit Administration may serve upon such director or officer a written notice of its intention to remove him from office. (b) Written notice of intention to remove or sus- pend director, officer or other person; per- sonal dishonesty; willful or continuing dis- regard; unfitness to continue in office or to participate in affairs of institution Whenever, in the opinion of the Farm Credit Administration, any director or officer of an in- stitution in the Farm Credit System, by conduct or practice with respect to another institution in the Farm Credit System or other business in- stitution that resulted in substantial financial loss or other damage, has evidenced either his personal dishonesty or a willful or continuing disregard for its safety and soundness and, in ad- dition, has evidenced his unfitness to continue as a director or officer, and whenever, in the opinion of the Farm Credit Administration, any other person participating in the conduct of the affairs of an institution in the Farm Credit Sys- tem, by the conduct or practice with respect to such institution or other institution in the