KRS 286.12-100: Examinations and investigations by commissioner -- Confidentiality of

information -- Prima facie evidence -- Enforcement of subpoena -- Use of

specialists -- Examination of affiliates.

(1) For purposes of enforcing this subtitle, the commissioner may:

(a) Conduct routine examinations of the books, accounts, records, and files of:

1. Any licensee and its affiliates; and

2. Any other person, to the extent the commissioner is authorized by any

other law to make an examination into the affairs of that person;

(b) Conduct investigations of student education loan servicers or additional

persons within or outside of the state as the commissioner deems necessary to

discover violations of this subtitle or to secure information necessary for its

proper enforcement;

(c) Control access to any documents and records of the licensee or other person

under examination or investigation; and

(d) 1. Take possession of the documents and records referenced under

paragraph (c) of this subsection or place a person i n exclusive charge of

those documents and records in the place where they are usually kept.

2. During the period of control under this paragraph, no person shall

remove or attempt to remove any of the documents and records except

pursuant to a court order or with the consent of the commissioner.

3. Unless the commissioner has reasonable grounds to believe that

documents or records of the licensee have been, or are at risk of being,

altered or destroyed for purposes of concealing a violation of this

subtitle, the licensee or owner of the documents or records shall have

access to the documents or records as necessary to conduct its ordinary

business affairs.

(2) For purposes of conducting examinations and investigations under this section, the

commissioner and the commissioner's examiner or designated representative:

(a) May:

1. Compel the attendance of any person or obtain any documents by

subpoenas;

2. Administer oaths and affirmations; and

3. Examine under oath or affirmation all persons whose testimony he or

she may require relative to the loans or business of the persons regulated

under this subtitle; and

(b) Shall have free access to the accounts, papers, records, correspondences, files,

safes, vaults, offices, and places of business relating to or used in connection

with any business regulated under this subtitle, including records kept by any

current or former officer, agent, contractor, or employee.

(3) A student education loan servicer shall:

(a) Not impede the commissioner, or the commissioner's examiner or designated

representative, from interviewing the servicer's officers, principals, members,

employees, independent contractors, agents, or customers; and

(b) Make available and grant ac cess to the commissioner, or the commissioner's

examiner or designated representative, the records and other property

referenced under subsection (2)(b) of this section.

(4) No person subject to investigation or examination under this subtitle shall

knowingly withhold, abstract, alter, remove, mutilate, destroy, or secrete any books,

records, or other information.

(5) (a) Subject to paragraphs (b) and (c) of this subsection, an examination report,

correspondence that relates to an examination report, and in formation

obtained during an examination or investigation shall be confidential.

(b) No officer or director of a student education loan servicer, employee of the

department, or employee of a state or federal regulatory authority shall release

any informati on contained in an examination conducted under this section

unless:

1. Required in a proper legal proceeding in which a subpoena and

protective order ensuring confidentiality has been issued by a court of

competent jurisdiction; or

2. The information is re ferred to an appropriate prosecuting attorney for

possible criminal proceedings.

(c) The department may furnish information to, and exchange information and

reports with, officials and examiners of other properly authorized state and

federal regulatory authorities and law enforcement agencies.

(6) Every official report concerning a student education loan servicer and every report

of examination shall be prima facie evidence of the facts therein stated for all

purposes in any action in which the department a nd the student education loan

servicer are parties.

(7) If any person fails to comply with a subpoena issued by the commissioner under this

section, the commissioner may petition the Franklin Circuit Court or any court of

competent jurisdiction for enforcement of the subpoena.

(8) In order to carry out the purposes of this subtitle, the commissioner may:

(a) Retain examiners, auditors, investigators, accountants, or other professionals

and specialists to conduct, or assist in the conduct of, any examination ,

investigation, or enforcement action; and

(b) Use, hire, contract, or employ public or private analytical systems, methods, or

software.

(9) The authority of this section shall remain in effect whether a person acts, or claims

to act, under any licensing law of this subtitle, or acts, or claims to act, without such

authority.

(10) If a report from, or an examination of, a licensee provides evidence of unlawful

activity between a licensee and affiliate benefitting, affecting, or arising from the

activities regulated by this subtitle, the affiliate shall be subject to examination by

the commissioner on the same terms as the licensee.