KRS 286.3-690: Cease and desist orders -- Orders of suspension or removal from office --

Appeal -- Enforcement of orders.

(1) (a) If the commissioner has knowledge or reasonable cause to believe that any

bank or trust company, or any director, officer, em ployee, agent, or other

person participating in the conduct of the affairs of the bank or trust company

has engaged in violations of law, or charter, or administrative regulation

promulgated by the department, or in unsafe or unsound business practices,

the commissioner may issue and serve upon the bank, trust company, director,

officer, employee, agent, or other person a notice of charges containing a

statement of facts with respect to the alleged violations or practices.

(b) The notice of charges issued u nder paragraph (a) of this subsection shall

contain the time and place at which an administrative hearing conducted in

accordance with KRS Chapter 13B will be held to determine whether an order

to cease and desist should issue against the bank, trust compa ny, director,

officer, employee, agent, or other person.

(2) Any party or parties served with a notice of charges issued pursuant to subsection

(1) of this section that fails to appear at the scheduled hearing personally or by a

duly-authorized representative shall be deemed to have consented to the issuance of

the cease and desist order.

(3) If the parties consent, or if upon the record made at the hearing the commissioner

finds that any violation or unsafe or unsound practice specified in the notice of

charges has been established, the commissioner may issue and serve upon the bank,

trust company, director, officer, employee, agent, or other person an order to cease

and desist from any violation or practice and, further, to take affirmative action to

correct the conditions resulting from any violation or practice.

(4) If the commissioner determines that the violation or practice, as specified in the

notice of charges issued pursuant to subsection (1) of this section, or the

continuation thereof, is likely to cause insolvency or substantial dissipation of assets

or earnings of the bank or trust company, or is likely to otherwise seriously

prejudice the interests of the bank's or trust company's depositors or investors, the

commissioner may issue an emergency order pursuant to KRS 13B.125 requiring

the bank, trust company, director, officer, employee, agent, or other person to cease

and desist from any violation or practice.

(5) (a) A cease and desist order or an emergency cease and desist order shall become

effective upon service upon the bank or trust company.

(b) Unless set aside, limited, or suspended, as provided in subsection (6) of this

section, a cease and desist order shall remain effective and enforceable

pending completion of an administrative hearing conducted in accordance

with KRS Chapter 13B.

(6) Within ten (10) days after service of an emergency cease and desist order, the party

or parties served may apply to the Circuit Court for the county in which the bank or

trust company is located, or the Fr anklin Circuit Court, for an injunction setting

aside, limiting, or suspending the enforcement, operation, or effectiveness of the

order pending completion of the administrative hearing.

(7) In the case of violation or threatened violation of, or failure to obey, an emergency

cease and desist order or a cease and desist order issued pursuant to this section, the

commissioner may apply to the Circuit Court for the county in which the bank or

trust company is located, or the Franklin Circuit Court, for an injunction to enforce

the order, and it shall be the duty of the court to issue the injunction.

(8) (a) The commissioner may serve upon any officer, director, or employee of a

bank or trust company a written notice of intention to remove him or her from

office if the commissioner determines that:

1. Subject to paragraph (b) of this subsection, the officer, director, or

employee has:

a. Committed any violation of law, an administrative regulation, or a

cease and desist order which has become final;

b. Engaged in or participated in any unsafe or unsound practice in

connection with the bank or trust company; or

c. Committed or engaged in any act, omission, or practice which

constitutes a breach of hi s or her fiduciary duty as officer or

director; and

2. Any of the following are satisfied:

a. The bank or trust company has suffered or will probably suffer

substantial financial loss or other damages;

b. The interests of the bank's or trust company's depo sitors or

investors could be seriously prejudiced by reason of the violation,

practice, or breach of fiduciary duty; or

c. The director, officer, or employee has received financial gain by

reason of the violation, practice, or breach of fiduciary duty.

(b) The violation, practice, or breach described in paragraph (a)1. of this

subsection shall be one (1):

1. Involving personal dishonesty on the part of the director, officer, or

employee; or

2. Which demonstrates a willful or continuing disregard for the saf ety or

soundness of the bank or trust company.

(c) The written notice issued under paragraph (a) of this subsection shall serve to

suspend the officer, director, or employee from office.

(d) The suspension referenced in paragraph (c) of this subsection shall:

1. Become effective upon service of the notice; and

2. Unless stayed by a court in proceedings authorized by subsection (10) of

this section, remain in effect pending the completion of the

administrative hearing under subsection (9) of this section.

(e) The resignation of an officer, director, or employee from a bank or trust

company shall not prohibit the commissioner from pursuing an action for

removal of the officer, director, or employee.

(9) A notice of intention to remove an officer, director, or employee from office shall

contain a:

(a) Statement of the facts constituting grounds therefor; and

(b) Time and place at which an administrative hearing will be held in accordance

with KRS Chapter 13B.

(10) Within ten (10) days after an officer, director, or employee has been suspended

from office, the officer, director, or employee may apply to the Circuit Court for the

county in which the bank or trust company is located for a stay of the suspension

pending the completion of the administrative hearing pu rsuant to the notice served

upon the officer, director, or employee.

(11) Any person aggrieved by a final order of the commissioner issued under this section

may obtain a review of the order by filing in the Circuit Court for the county in

which the bank o r trust company is located a petition of appeal in accordance with

KRS Chapter 13B.

(12) The commissioner may apply to the Circuit Court for the county in which the bank

or trust company is located for an injunction to enforce any final order issued under

this section, and it shall be the duty of the court to issue the injunction.