N.Y. Banking Law § 130: Restrictions on officers, directors and employees

§ 130. Restrictions on officers, directors and employees. 1. No

officer, director, clerk or other employee of any bank or trust company,

and no person in any way interested or concerned in the management of

its affairs, shall, acting on his own behalf or for any partnership or

unincorporated association of which he is a member or for any

corporation, of which he owns or controls a majority of the capital

stock, discount, or directly or indirectly make any loan upon, any note

or other evidence of debt which he shall know to have been offered for

discount to such bank or trust company, and to have been refused. Every

person violating the provisions of this subdivision shall, for each

offense, forfeit to the people of the state twice the amount of the loan

which he shall have made.

2. No officer, director, clerk or other employee of any bank or trust

company shall, directly or indirectly, purchase or be interested in the

purchase of any promissory note or other evidence of debt issued by it

on terms more favorable than those available to the general public,

provided, however, that every director, and every officer, clerk or

other employee who is a stockholder of such bank or trust company, may

purchase promissory notes or other evidences of debt issued by it in the

same ratio as to amount and on the same terms as any other stockholder.

3. (a) No executive officer of a bank or trust company may be an

executive officer, director or trustee of another bank or trust company,

savings bank, savings and loan association, national bank, federal

savings bank or federal savings association, the principal office of

which institution is located in this state, bank holding company or

foreign banking corporation maintaining a branch in this state, unless

permission therefor has been granted by the superintendent of financial

services pursuant to the provisions of paragraph (b) of this

subdivision, except that an executive officer of a bank or trust company

which is a subsidiary of a bank holding company may be (i) an executive

officer and (ii) a director of the bank holding company and of one or

more banking institutions which are subsidiaries of such bank holding

company.

(b) The superintendent of financial services shall have the power to

determine by regulation who shall be considered, under the provisions of

this subdivision, to be an executive officer, and by a general or

specific regulation to grant permission to an executive officer of a

bank or trust company to be an executive officer, director or trustee or

both an executive officer and director or a trustee of another bank or

trust company, savings bank, or savings and loan association, national

bank, federal savings bank or federal savings association, the principal

office of which is located in this state, bank holding company, or

foreign banking corporation maintaining a branch in this state. Such

permission may be granted only if in the judgment of the superintendent

of financial services such service by the executive officer will be

consistent with the policy of the state of New York as declared in

section ten of this chapter. The superintendent of financial services

shall have the power to revoke such permission whenever he or she finds,

after reasonable notice and an opportunity to be heard, that the public

interest requires such revocation.

(c) For the purposes of this subdivision, the terms "subsidiary",

"banking institution" and "bank holding company" shall each be given the

same meaning as is contained in their respective definition in section

one hundred forty-one of this chapter, except that the definition of the

term "banking institution" is modified to include a national bank,

federal savings bank or federal savings association, the principal

office of which institution is in this state, and a foreign banking

corporation maintaining a branch in this state.

(d) All other restrictions and limitations imposed by this chapter on

executive officers and directors of banks and trust companies shall

continue in effect.

5. Every director of a bank or trust company who is obligated on any

loan or other extension of credit made by such bank or trust company to

such director or to any other individual, partnership, unincorporated

association or corporation, shall file a statement of his financial

condition with such bank or trust company at least once in each year and

at such other times as the superintendent may require. This subdivision

shall not apply to directors whose obligations are secured by collateral

having an ascertained market value of at least fifteen per centum more

than the amount of such obligations. The superintendent shall have the

power to determine by regulation what shall be considered, under the

provisions of this subdivision, to be a loan or an extension of credit.

6. If any officer of a bank or trust company becomes indebted to any

domestic or foreign banking organization, other than the bank or trust

company of which he is an officer, or becomes indebted to any banking

institution organized under the laws of the United States, he shall

within ten calendar days after he becomes so indebted make a written

report to the board of directors of the bank or trust company of which

he is an officer, stating the date and amount of any such loan or

indebtedness, and the security therefor. In addition to the foregoing

reports he shall render written reports of such other indebtedness as

the board of directors of the bank or trust company may by resolution

require of its officers. The superintendent shall have the power to

determine by regulation who shall be considered an officer and what

shall be considered a loan or indebtedness under the provisions of this

subdivision.

The provision of this subdivision shall not be applicable if the

amount of the indebtedness does not exceed an amount which shall be

determined by the superintendent.

7. (a) Every person who is directly or indirectly the beneficial owner

of more than ten per centum of any class of any equity security of a

bank or trust company or who is a director or officer thereof, shall

file, within ten days following (i) the effective date of this section,

or (ii) the date on which he becomes such beneficial owner, director or

officer, whichever is later, a statement with the superintendent of the

amount of all equity securities of such bank or trust company of which

he is the beneficial owner, and within ten days after the close of each

calendar month thereafter, if there has been any change in such

ownership during such month, shall file with the superintendent a

statement indicating his ownership at the close of the calendar month

and such changes in such ownership as have occurred during such calendar

month.

(b) Any such beneficial owner, director or officer of a bank or trust

company shall not be subject to the requirements of this section if

(1) he is required by section sixteen (a) of the securities exchange

act of nineteen hundred thirty-four, as amended, to file with the board

of governors of the federal reserve system in accordance with regulation

f of such board or with the federal deposit insurance corporation in

accordance with part three hundred thirty-five of title twelve of the

regulations of such corporation, a statement as to his stock ownership

and he files with the superintendent at his New York city office four

copies of each such statement filed with such board or corporation, or

(2) he is such beneficial owner, director or officer of a bank or

trust company, all of the voting securities of which, excepting only

directors' qualifying shares, are owned, controlled or held with power

to vote by a bank holding company as defined in section one hundred

forty-one of this chapter or by a single corporation, or

(3) he is such beneficial owner, director or officer of a bank or

trust company, all of the voting securities of which, excepting only

directors' qualifying shares, are owned, controlled or held with power

to vote by one or more banks organized under the laws of a foreign

country, or

(4) he is such beneficial owner, director or officer of a trust

company, all of the capital stock of which is owned by twenty or more

savings banks chartered by the state of New York.

(c) The superintendent shall have power to adopt such regulations as

the superintendent shall deem necessary or proper to implement the

provisions of this section.