12 U.S.C. § 2264 — Suspension or removal of director or offi-

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 Page 1365 TITLE 12—BANKS AND BANKING § 2264 Farm Credit System or other business institu- tion that resulted in substantial financial loss or other damage, has evidenced either personal dishonesty or a willful or continuing disregard for its safety and soundness and, in addition, has evidenced his unfitness to participate in the conduct of the affairs of such institution, the Farm Credit Administration may serve upon such director, officer, or other person a written notice of its intention to remove that director, officer, or other person from office or to prohibit his further participation in any manner in the conduct of the affairs of the institution. (c) Suspension from office; prohibition from fur- ther participation in conduct of affairs of in- stitution; service of notice In respect to any director or officer of an in- stitution in the Farm Credit System or any other person referred to in subsection (a) or (b) of this section, the Farm Credit Administration may, if it deems it necessary for the protection of the institution or the interests of its share- holders and the investors in the Farm Credit System obligations, by written notice to such effect served upon such director, officer, or other person, suspend such director, officer, or other person from office or prohibit such direc- tor, officer, or other person from further partici- pation in any manner in the conduct of the af- fairs of the institution. Such suspension or pro- hibition shall become effective upon service of such notice and, unless stayed by a court in pro- ceedings authorized by subsection (e) of this sec- tion, shall remain in effect pending the comple- tion of the administrative proceedings pursuant to the notice served under subsection (a) or (b) and until such time as the Farm Credit Admin- istration shall dismiss the charges specified in such notice, or, if an order of removal or prohi- bition is issued against the director or officer or other person, until the effective date of any such order. Copies of any such notice shall also be served upon the institution of which the person is a director or officer or in the conduct of whose affairs the person has participated. (d) Statement of grounds for removal or prohibi- tion; notice and hearing; order of suspension, removal or prohibition; service of order A notice of intention to remove a director, of- ficer, or other person from office or to prohibit such director’s, officer’s, or other person’s par- ticipation in the conduct of the affairs of an in- stitution in the Farm Credit System, shall con- tain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after the date of service of such notice, unless an earlier or a later date is set by the Farm Credit Admin- istration at the request of (1) such director or of- ficer or other person, and for good cause shown, or (2) the Attorney General of the United States. Unless such director, officer, or other person shall appear at the hearing in person or by a duly authorized representative, such director, officer, or other person shall be deemed to have consented to the issuance of an order of such re- moval or prohibition. In the event of such con- sent, or if upon the record made at any such hearing the Farm Credit Administration shall find that any of the grounds specified in such notice have been established, the Farm Credit Administration may issue such orders of suspen- sion or removal from office, or prohibition from participation in the conduct of the affairs of the institution, as it may deem appropriate. A copy of an order issued under this subsection shall be served upon the institution concerned. Any such order shall become effective at the expiration of thirty days after service upon such institution and the director, officer, or other person con- cerned (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall re- main effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the agency or a reviewing court. (e) Stay of suspension or prohibition Within ten days after any director, officer, or other person has been suspended from office or prohibited from participation in the conduct of the affairs of a System institution under sub- section (c) of this section, such director, officer, or other person may apply to the United States district court for the judicial district in which the home office of the institution is located, or the United States district court for the District of Columbia, for a stay of either such suspension or prohibition, or both, pending the completion of the administrative proceedings pursuant to the notice served upon such director, officer, or other person under subsection (a) or (b), and such court shall have jurisdiction to stay either such suspension or prohibition, or both. (Pub. L. 92–181, title V, § 5.28, as added Pub. L. 99–205, title II, § 204, Dec. 23, 1985, 99 Stat. 1696; amended Pub. L. 100–233, title VIII, § 805(aa), Jan. 6, 1988, 101 Stat. 1717; Pub. L. 100–399, title VII, § 702(d), Aug. 17, 1988, 102 Stat. 1006.) Editorial Notes PRIOR PROVISIONS A prior section 5.28 of Pub. L. 92–181 was renumbered section 5.42 and is set out as a note under section 2001 of this title. AMENDMENTS 1988—Subsec. (a). Pub. L. 100–233, § 805(aa)(1), des- ignated provisions preceding subsec. (b) as subsec. (a). Subsec. (e). Pub. L. 100–399 substituted ‘‘subsection (c)’’ for ‘‘subsection (d)’’. Pub. L. 100–233, § 805(aa)(2), substituted ‘‘subsection (d) of this section’’ for ‘‘subsection (d)(3) of this sec- tion’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title. 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. Page 1366 TITLE 12—BANKS AND BANKING § 2265 § 2265. Suspension or removal of director or offi- cer charged with felony (a) Whenever any director or officer of an in- stitution in the Farm Credit System, or other person participating in the conduct of the af- fairs of such institution, is charged in any infor- mation, indictment, or complaint authorized by a United States attorney, with the commission of or participation in a crime involving dishon- esty or breach of trust that is punishable by im- prisonment for a term exceeding one year under State or Federal law, the Farm Credit Adminis- tration may, if continued service or participa- tion by the individual may pose a threat to the interests of the institution’s shareholders or in- vestors in Farm Credit System obligations or threaten to impair public confidence in the in- stitution or the Farm Credit System, by written notice served upon such director, officer, or other person, suspend such director, officer, or other person from office or prohibit such direc- tor, officer, or other person from further partici- pation in any manner in the conduct of the af- fairs of the institution. A copy of such notice shall also be served upon the institution. Such suspension or prohibition shall remain in effect until such information, indictment, or com- plaint is finally disposed of or until terminated by the Farm Credit Administration. In the event that a judgment of conviction with respect to such crime is entered against such director, offi- cer, or other person, and at such time as such judgment is not subject to further appellate re- view, the Farm Credit Administration may, if continued service or participation by the indi- vidual may pose a threat to the interests of the institution’s shareholders or the investors in Farm Credit System obligations or may threat- en to impair public confidence in the institution or the Farm Credit System, issue and serve upon such director, officer, or other person an order removing such director, officer, or other person from office or prohibiting such director, officer, or other person from further participation in any manner in the conduct of the affairs of the institution except with the consent of the Farm Credit Administration. A copy of such order shall also be served upon such institution, whereupon such director or officer shall cease to be a director or officer of such institution. A finding of not guilty or other disposition of the charge shall not preclude the Farm Credit Ad- ministration from thereafter instituting pro- ceedings to remove such director, officer, or other person from office or to prohibit further participation in Farm Credit System affairs under section 2264 of this title. Any notice of suspension or order of removal issued under this paragraph shall remain effective and out- standing until the completion of any hearing or appeal authorized under subsection (b) unless terminated by the Farm Credit Administration. (b) Within thirty days from service of any no- tice of suspension or order of removal issued under subsection (a), the director, officer, or other person concerned may request in writing an opportunity to appear before the Farm Credit Administration to show that the continued serv- ice to or participation in the conduct of the af- fairs of the institution by such individual does not, or is not likely to, pose a threat to the in- terest of the institution’s shareholders or the in- vestors in Farm Credit System obligations or threaten to impair public confidence in the in- stitution or the Farm Credit System. Upon re- ceipt of any such request, the Farm Credit Ad- ministration shall fix a time (not more than thirty days after receipt of such request, unless extended at the request of the concerned direc- tor, officer, or other person) and place at which the director, officer, or other person may ap- pear, personally or through counsel, before the Chairman of the Farm Credit Administration or designated employees of the Farm Credit Ad- ministration to submit written materials (or, at the discretion of the Farm Credit Administra- tion, oral testimony) and oral argument. Within sixty days of such hearing, the Farm Credit Ad- ministration shall notify the director, officer, or other person whether the suspension or prohibi- tion from participation in any manner in the conduct of the affairs of the institution will be continued, terminated, or otherwise modified, or whether the order removing such director, offi- cer, or other person from office or prohibiting such individual from further participation in any manner in the conduct of the affairs of the institution will be rescinded or otherwise modi- fied. Such notification shall contain a statement of the basis for the Farm Credit Administra- tion’s decision, if adverse to the director, offi- cer, or other person. The Farm Credit Adminis- tration may prescribe such rules as may be nec- essary to effectuate the purposes of this sub- section. (Pub. L. 92–181, title V, § 5.29, as added Pub. L. 99–205, title II, § 204, Dec. 23, 1985, 99 Stat. 1698; amended Pub. L. 100–233, title VIII, § 805(bb), Jan. 6, 1988, 101 Stat. 1717; Pub. L. 100–399, title VII, § 702(e), Aug. 17, 1988, 102 Stat. 1006.) Editorial Notes PRIOR PROVISIONS A prior section 5.29 of Pub. L. 92–181 was renumbered section 5.43 and is set out as a note under section 2001 of this title. AMENDMENTS 1988—Subsec. (a). Pub. L. 100–233, § 805(bb)(1), sub- stituted ‘‘may pose a threat to the interests of the in- stitution’s shareholders or investors in Farm Credit System obligations or may threaten to impair public confidence in the institution or the Farm Credit Sys- tem’’ for ‘‘may pose a threat to the interest of the in- stitution’s shareholders or the investors in the Farm Credit System obligations or may threaten to impair public confidence in the institution or Farm Credit System’’. Subsec. (b). Pub. L. 100–233 struck out ‘‘may’’ before ‘‘threaten to impair public confidence’’. Pub. L. 100–233, § 805(bb)(2), substituted ‘‘of the insti- tution’s shareholders or the investors in Farm Credit System obligations or may threaten to impair public confidence in the institution or the Farm Credit Sys- tem’’ for ‘‘in Farm Credit System obligations’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–399 effective as if enacted immediately after enactment of Pub. L. 100–233, which was approved Jan. 6, 1988, see section 1001(a) of Pub. L. 100–399, set out as a note under section 2002 of this title.