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A BILL TO BE ENTITLED
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AN ACT
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relating to certain administrative procedures and enforcement |
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authority relating to state banks, state trust companies, and bank |
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holding companies. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Section 31.201, Finance Code, is |
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amended to read as follows: |
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Sec. 31.201. BANKING COMMISSIONER HEARING; INFORMAL |
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DISPOSITION. |
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SECTION 2. Section 31.201, Finance Code, is amended by |
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adding Subsection (d) to read as follows: |
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(d) The banking commissioner may informally dispose of a |
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matter within the jurisdiction of and before the banking |
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commissioner by consent order, agreed settlement, or default. |
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SECTION 3. Subchapter A, Chapter 35, Finance Code, is |
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amended by adding Section 35.0001 to read as follows: |
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Sec. 35.0001. APPLICABILITY TO BANK SUBSIDIARIES. This |
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subchapter applies to a subsidiary of a state bank, a present or |
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former officer, director, or employee of a subsidiary, or a |
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controlling shareholder or other person participating in the |
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affairs of a subsidiary in the same manner as the subchapter applies |
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to a state bank, a present or former officer, director, or employee |
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of a state bank, or a controlling shareholder or other person |
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participating in the affairs of a state bank. |
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SECTION 4. Section 35.002, Finance Code, is amended by |
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adding Subsection (b-1) to read as follows: |
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(b-1) A proposed cease and desist order may require an |
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officer, employee, or director of a state bank, or the bank itself |
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acting through an authorized person, to cease or desist from a |
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violation or other practice or to take affirmative action to |
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correct the conditions resulting from a violation or other |
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practice, including the payment of restitution or other action that |
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the banking commissioner determines is appropriate. |
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SECTION 5. Subchapter A, Chapter 35, Finance Code, is |
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amended by adding Section 35.0035 to read as follows: |
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Sec. 35.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO |
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CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a |
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person is considered to have been finally convicted of an offense if |
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the person's case is not subject to further appellate review and: |
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(1) a sentence was imposed on the person; |
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(2) the person received probation or community |
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supervision, including deferred adjudication community |
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supervision; or |
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(3) the court deferred final disposition of the |
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person's case. |
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(b) The banking commissioner has grounds to remove or |
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prohibit a present or former officer, director, or employee of a |
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state bank from office or employment in, or prohibit a controlling |
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shareholder or other person participating in the affairs of a state |
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bank from further participation in the affairs of, a state bank or |
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any other entity chartered, registered, permitted, or licensed by |
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the banking commissioner if the person has been finally convicted |
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of a felony offense involving: |
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(1) a bank or other financial institution; |
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(2) dishonesty; or |
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(3) breach of trust. |
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(c) If the banking commissioner has grounds for action under |
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Subsection (b), the banking commissioner may serve a removal or |
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prohibition order, as appropriate, on the person who has been |
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finally convicted of a felony offense. The banking commissioner |
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shall also serve a copy of the order on any state bank that the |
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person is affiliated with at the time of service of the order. |
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(d) An order issued under this section becomes effective |
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immediately on service and continues in effect unless the order is: |
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(1) stayed or terminated by the banking commissioner; |
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(2) set aside by the banking commissioner after a |
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hearing; or |
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(3) stayed or vacated on appeal. |
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(e) Not later than the 30th day after the date an order is |
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issued under this section, the person against whom the order is |
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issued may request in writing a hearing before the banking |
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commissioner to show that the person's continued service to a state |
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bank or participation in the affairs of a state bank does not, or is |
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unlikely to, threaten the interests of the depositors, creditors, |
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or shareholders of the state bank or the public confidence in the |
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state bank. |
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(f) Not later than the 30th day after the date the request |
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for a hearing is received under this section, the banking |
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commission shall hold the hearing, unless the party requesting the |
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hearing requests a later date. At the hearing, the party requesting |
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the hearing has the burden of proof. |
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(g) After the hearing, the banking commissioner may affirm, |
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modify, or set aside, in whole or in part, the order. An order |
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affirming or modifying the order is immediately final for purposes |
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of enforcement and appeal. The order may be appealed as provided by |
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Sections 31.202, 31.203, and 31.204. |
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SECTION 6. Subchapter B, Chapter 35, Finance Code, is |
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amended by adding Section 35.1001 to read as follows: |
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Sec. 35.1001. APPLICABILITY TO BANK SUBSIDIARIES. This |
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subchapter applies to a subsidiary of a state bank, a present or |
|
former officer, director, or employee of a subsidiary, or a |
|
controlling shareholder or other person participating in the |
|
affairs of a subsidiary in the same manner as the subchapter applies |
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to a state bank, a present or former officer, director, or employee |
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of a state bank, or a controlling shareholder or other person |
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participating in the affairs of a state bank. |
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SECTION 7. The heading to Section 181.201, Finance Code, is |
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amended to read as follows: |
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Sec. 181.201. BANKING COMMISSIONER HEARING; INFORMAL |
|
DISPOSITION. |
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SECTION 8. Section 181.201, Finance Code, is amended by |
|
adding Subsection (d) to read as follows: |
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(d) The banking commissioner may informally dispose of a |
|
matter within the jurisdiction of and before the banking |
|
commissioner by consent order, agreed settlement, or default. |
|
SECTION 9. Subchapter A, Chapter 185, Finance Code, is |
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amended by adding Section 185.0001 to read as follows: |
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Sec. 185.0001. APPLICABILITY TO STATE TRUST COMPANY |
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SUBSIDIARIES. This subchapter applies to a subsidiary of a state |
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trust company, a present or former officer, director, manager, |
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managing participant, or employee of a subsidiary, or a controlling |
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shareholder or other person participating in the affairs of a |
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subsidiary in the same manner as the subchapter applies to a state |
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trust company, a present or former officer, director, manager, |
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managing participant, or employee of a state trust company, or a |
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controlling shareholder or other person participating in the |
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affairs of a state trust company. |
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SECTION 10. Section 185.002, Finance Code, is amended by |
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adding Subsection (b-1) to read as follows: |
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(b-1) A proposed cease and desist order may require an |
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officer, employee, director, manager, or managing participant of a |
|
state trust company, or the state trust company itself acting |
|
through an authorized person, to cease or desist from a violation or |
|
other practice or to take affirmative action to correct the |
|
conditions resulting from a violation or other practice, including |
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the payment of restitution or other action that the banking |
|
commissioner determines is appropriate. |
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SECTION 11. Section 185.003(a), Finance Code, is amended to |
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read as follows: |
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(a) The banking commissioner has grounds to remove or |
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prohibit a present or former officer, director, manager, managing |
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participant, or employee of a state trust company from office or |
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employment in, or prohibit a controlling shareholder or participant |
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or other person participating in the affairs of a state trust |
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company from further participation in the affairs of, the state |
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trust company or any other entity chartered, registered, permitted, |
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or licensed by the banking commissioner if the banking commissioner |
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determines from examination or other credible evidence that: |
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(1) the person: |
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(A) intentionally committed or participated in |
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the commission of an act described by Section 185.002(a) with |
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regard to the affairs of a financial institution, as defined by |
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Section 201.101; |
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(B) violated a final cease and desist order |
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issued by a state or federal regulatory agency against the person or |
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an entity in which the person is or was an officer, director, or |
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employee; or |
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(C) made, or caused to be made, false entries in |
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the records of a financial institution; |
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(2) because of this action by the person: |
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(A) the financial institution has suffered or |
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will probably suffer financial loss or expense, or other damage; |
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(B) the interests of the clients, depositors, |
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creditors, or shareholders of the financial institution have been |
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or could be prejudiced; or |
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(C) the person has received financial gain or |
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other benefit by reason of the action, or likely would have if the |
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action had not been discovered; and |
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(3) that action by the person: |
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(A) involves personal dishonesty on the part of |
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the person; or |
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(B) demonstrates wilful or continuing disregard |
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for the safety or soundness of the financial institution. |
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SECTION 12. Subchapter A, Chapter 185, Finance Code, is |
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amended by adding Section 185.0035 to read as follows: |
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Sec. 185.0035. REMOVAL OR PROHIBITION ORDERS IN RESPONSE TO |
|
CERTAIN CRIMINAL OFFENSES. (a) For purposes of this section, a |
|
person is considered to have been finally convicted of an offense if |
|
the person's case is not subject to further appellate review and: |
|
(1) a sentence was imposed on the person; |
|
(2) the person received probation or community |
|
supervision, including deferred adjudication community |
|
supervision; or |
|
(3) the court deferred final disposition of the |
|
person's case. |
|
(b) The banking commissioner has grounds to remove or |
|
prohibit a present or former officer, director, manager, managing |
|
participant, or employee of a state trust company from office or |
|
employment in, or prohibit a controlling shareholder or participant |
|
or other person participating in the affairs of a state trust |
|
company from further participation in the affairs of, the state |
|
trust company or any other entity chartered, registered, permitted, |
|
or licensed by the banking commissioner if the person has been |
|
finally convicted of a felony offense involving: |
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(1) a financial institution, as defined by Section |
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201.101; |
|
(2) dishonesty; or |
|
(3) breach of trust. |
|
(c) If the banking commissioner has grounds for action under |
|
Subsection (b), the banking commissioner may serve a removal or |
|
prohibition order, as appropriate, on the person who has been |
|
finally convicted of a felony offense. The banking commissioner |
|
shall also serve a copy of the order on any state trust company that |
|
the person is affiliated with at the time of service of the order. |
|
(d) An order issued under this section becomes effective |
|
immediately on service and continues in effect unless the order is: |
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(1) stayed or terminated by the banking commissioner; |
|
(2) set aside by the banking commissioner after a |
|
hearing; or |
|
(3) stayed or vacated on appeal. |
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(e) Not later than the 30th day after the date an order is |
|
issued under this section, the person against whom the order is |
|
issued may request in writing a hearing before the banking |
|
commissioner to show that the person's continued service to a state |
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trust company or participation in the affairs of a state trust |
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company does not, or is unlikely to, threaten the interests of the |
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clients, depositors, creditors, or shareholders of the state trust |
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company or the public confidence in the state trust company. |
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(f) Not later than the 30th day after the date a request for |
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a hearing is received under this section, the banking commissioner |
|
shall hold the hearing, unless the party requesting the hearing |
|
requests a later date. At the hearing, the party requesting the |
|
hearing has the burden of proof. |
|
(g) After the hearing, the banking commissioner may affirm, |
|
modify, or set aside, in whole or in part, the order. An order |
|
affirming or modifying the order is immediately final for purposes |
|
of enforcement and appeal. The order may be appealed as provided by |
|
Sections 181.202, 181.203, and 181.204. |
|
SECTION 13. Subchapter B, Chapter 185, Finance Code, is |
|
amended by adding Section 185.1001 to read as follows: |
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Sec. 185.1001. APPLICABILITY TO STATE TRUST COMPANY |
|
SUBSIDIARIES. This subchapter applies to a subsidiary of a state |
|
trust company, a present or former officer, director, manager, |
|
managing participant, or employee of a subsidiary, or a controlling |
|
shareholder or other person participating in the affairs of a |
|
subsidiary in the same manner as the subchapter applies to a state |
|
trust company, a present or former officer, director, manager, |
|
managing participant, or employee of a state trust company, or a |
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controlling shareholder or other person participating in the |
|
affairs of a state trust company. |
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SECTION 14. Section 202.005, Finance Code, is amended by |
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adding Subsection (a-1) to read as follows: |
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(a-1) The grounds, procedures, and effects of an |
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enforcement proceeding brought under this section apply to a bank |
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holding company, an officer, director, or employee of a bank |
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holding company, or a controlling shareholder or other person |
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participating in the affairs of a bank holding company in the same |
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manner as the grounds, procedures, and effects apply to a state |
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bank, an officer, director, or employee of a state bank, or a |
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controlling shareholder or other person participating in the |
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affairs of a state bank. |
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SECTION 15. This Act takes effect September 1, 2015. |