§ 19.1

Scope.

The rules and procedures set forth in this part are applicable to proceedings by the Comptroler of the Currency to determine whether to order a national bank or a District bank to cease and desist from practices and violations described in section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), as amended, and enumerated in § 19.2. The procedures for issuing such orders prescribed in section 8 of such Act will be followed and hearings required thereunder will be conducted in accordance with the rules and procedures set forth in this part.

§ 19.2 Grounds for cease-and-desist orders.

If, in the opinion of the Comptroller of the Currency, any national bank or District bank is engaging in or has engaged, or the Comptroller of the Currency has reasonable cause to believe that the bank is about to engage, in an unsafe or unsound practice in conducting the business of such bank, or is violating or has violated, or the Comptroller has reasonable cause to believe that the bank is about to violate, a law, rule, or regulation, or any condition imposed in writing by the Comptroller in connection with the granting of an application or other request by the bank, or any written agreement entered into with the Comptroller, the Comptroller may issue and serve upon the bank a notice of charges in respect thereof.

§ 19.3

Notice of charges and hearing. The notice referred to in § 19.2 shall contain a statement of the facts constituting the alleged violation or violations or the unsafe or unsound practice or practices, and shall fix a time and place at which a hearing will be held to determine whether an order to cease and desist therefrom should issue against the bank. Such hearing shall be set for a date not earlier than 30 days nor later than 60 days after service of such notice unless an earlier or a later date is set by the Comptroller at the request of the bank. Unless the bank appears at the hearing by a duly authorized representative, it shall be deemed to have consented to the issuance of the cease-and-desist order.

In the event of the consent described in § 19.3, or if upon the record made at any such hearing, the Comptroller finds that any violation or unsafe or unsound practice specified in the notice of charges has been established, the Comptroller may issue and serve upon the bank an order to cease and desist from any such violation or practice. Such order may, by provisions which may be mandatory or otherwise, require the bank and its directors, officers, employees, and agents to cease and desist from the same and to take affirmative action to correct the conditions resulting from any such violation or practice.

A cease-and-desist order shall become effective at the expiration of 30 days after the service of such order upon the bank (except in the case of a cease-anddesist order issued upon consent, which shall become effective at the time specified therein), and shall remain effective and enforceable as provided therein, except to such extent as it is stayed, modified, terminated, or set aside by action of the Comptroller or a reviewing court. § 19.6 Temporary cease-and-desist orders.

Whenever the Comptroller determines that the violation or threatened violation or the unsafe or unsound practice or practices, specified in the notice of charges served upon the bank and referred to in § 19.3, or the continuation thereof, is likely to cause insolvency or substantial dissipation of assets or earnings of the bank, or is likely to otherwise

seriously prejudice the interests of its depositors, the Comptroller may issue & temporary order requiring the bank to cease and desist from any such violation or practice.

$ 19.7

Effective date of temporary order.

Such order referred to in § 19.6 shall become effective upon service upon the bank and, unless set aside, limited, or suspended by a court in proceedings authorized under section 8 of the Federal Deposit Insurance Act, as amended, shall remain effective and enforceable pending the completion of the administrative proceedings held pursuant to such notice and until such time as the Comptroller shall dismiss the charges specified in such notice, or if a cease-and-desist order is issued against the bank pursuant to § 19.4, until the effective date of any such order.

§ 19.8 Representation and suspension.

(a) Appearance before a hearing examiner. Any person who is a member in good standing of the bar of the highest court of any State, possession, territory, Commonwealth, or the District of Columbia, may with represent others respect to a cease-and-desist proceeding upon filing with the Administrative Assistant to the Comptroller a written declaration that he is currently qualified as provided by this paragraph and is authorized to represent the particular party on whose behalf he acts. Any other person desiring to represent others before a hearing examiner may be required to file with the Administrative Assistant a power of attorney showing his authority to act in such capacity, and he may be required to show to the satisfaction of such examiner that he has the requisite qualifications. Attorneys or other representatives of parties to any proceeding provided for in this part shall file a written notice of appearance with the Adminstrative Assistant.

(b) Summary suspension. Contemptuous conduct at any hearing before the Comptroller or a hearing examiner shall be grounds for exclusion from any such hearing and suspension for the duration thereof.

§ 19.9 Notice of hearing.

Whenever a hearing is ordered by the Comptroller pursuant to section 8 of the Federal Deposit Insurance Act, a notice of hearing shall be given by the designated officer acting for the Comptroller

to the party afforded the hearing. Such notice shall state the time, place, and nature of the hearing, the hearing examiner, and the legal authority and jurisdiction under which the hearing is to be held, and shall contain a statement of the matters of fact or law constituting the grounds for the hearing, and shall be delivered by personal service or by registered mail to the last known address, or other appropriate means, sufficiently in advance of the date set for hearing to comply with the provisions of the Federal Deposit Insurance Act, as amended, and § 19.3. § 19.10

Answer.

(a) When required. In any notice of hearing issued by the Comptroller, the Comptroller may direct the party afforded the hearing to file an answer to the allegations contained in the notice, and any party to any proceeding may file an answer. Except where a different period of not less than 10 days after service of a notice of hearing is specified by the Comptroller, a party directed to file an answer, or a party who elects to file an answer, shall file the same with the Administrative Assistant within 20 days after service upon him of the notice of hearing.

(b) Requirements of answer; effect of failure to deny. An answer filed under this section shall specifically admit, deny, or state that the party does not have and is unable to obtain sufficient information to admit or deny each allegation in the notice of hearing. A statement of lack of information shall have the effect of a denial. Any allegation not denied shall be deemed to be admitted. When a party intends in good faith to deny only a part or a qualification of an allegation, he shall specify so much of it as is true and shall deny only the remainder.

(c) Admitted allegations. If a party filing an answer under this section elects not to contest the allegations of fact set forth in the notice of hearing, his answer shall consist of a statement that he admits all of the allegations to be true. Such an answer shall constitute a waiver of hearing as to the facts alleged in the notice, and together with the notice will provide a record basis on which the hearing examiner shall file with the Administrative Assistant his recommended decision and his findings of fact and conclusions of law. Any such party may, however, reserve the right

to file with the Administrative Assistant exceptions to such recommended decision, findings, and conclusions as provided in § 19.16.

(d) Effect of failure to answer. Failure of a party to file an answer required by this section within the time provided shall be deemed to constitute a waiver of his right to appear and contest the allegations of the notice of hearing and to authorize the hearing examiner, without further notice to the party, to find the facts to be as alleged in the notice and to file with the Administrative Assistant a recommended decision containing such findings and appropriate conclusions. The Comptroller or the hearing examiner may, for cause shown, permit the filing of a delayed answer after the time for filing the answer has expired.

(e) Opportunity for informal settlement. Any interested party may at any time submit to the Administrative Assistant, for consideration by the Comptroller, written offers or proposals for settlement for a proceeding, without prejudice to the rights of the parties. No such offer or proposal, or counteroffer or proposal, shall be admissible in evidence over the objection of any party in any hearing in connection with such proceeding. The foregoing provisions of this section shall not preclude settlement of any proceeding through the regular adjudicatory process by the filing of an answer as provided in this section, or by submission of the case to the trial examiner on a stipulation of facts and an agreed order.

§ 19.11 Conduct of hearings.

(a) Authority of hearing examiner. All hearings governed by this part shall be conducted in accordance with the provisions of chapter 5 of title 5 of the United States Code. The hearing examiner designated by the Comptroller to preside at any such hearing shall have complete charge of the hearing, and he shall have the duty to conduct it in a fair and impartial manner and to take all necessary action to avoid delay in the disposition of proceedings. Such examiner shall have all powers necessary to that end, including the following:

(1) To administer oaths and affirmations:

(2) To issue subpenas and subpenas duces tecum, as authorized by law, and to revoke, quash, or modify any such subpena:

(3) To receive relevant evidence and

to rule upon the admission of evidence and offers of proof:

(4) To take or cause depositions to be taken:

(5) To regulate the course of the hearing and the conduct of the parties and their counsel:

(6) To hold conferences for the settlement or simplification of issues or for any other proper purpose; and

(7) To consider and rule upon, as justice may require, all procedural and other motions appropriate in an adversary proceeding, except that a hearing examiner shall not have power to decide any motion to dismiss the proceedings or other motion which reslts in final determination of the merits of the proceedings.

Without limitation on the foregoing provisions of this paragraph, the hearing examiner, shall subject to the provisions of this part, have all the authority of section 556(c) of title 5 of the United States Code.

(b) Prehearing conference. The hearing examiner may, on his own initiative or at the request of any party, direct counsel for all parties to meet with him at a specified time and place prior to the hearing, or to submit suggestions to him in writing, for the purpose of considering any or all of the following:

(1) Simplification and clarification of the issues:

(2) Stipulations, admissions of fact and of the contents and authenticity of documents:

(3) Matters of which official notice will be taken: and

(4) Such other matters as may aid in the orderly disposition of the proceeding, including disclosure of the names of witnesses and of documents or other physical exhibits which will be introduced in evidence in the course of the proceeding. Such conferences in the discretion of the hearing examiner, need not be recorded, but the hearing examiner shall enter in the record an order which recites the results of the conference. Such order shall include the examiner's rulings upon matters considered at the conference, together with appropriate directions to the parties, if any; and such order shall control the subsequent course of the proceedings, unless modified at the hearing to prevent manifest injustice. Except as authorized by law, the hearing examiner shall not consult any person or party on any fact in issue unless upon

notice and opportunity for all parties to participate, nor be responsible to or subject to the supervision or direction of any officer, employee, or agent engaged in the performance of investigative or prosecuting functions. No officer, employee, or agent engaged in the performance of investigative or prosecuting functions in any case shall, in that case or a factually related case, participate or advise in the decision of the hearing examiner except as a witness or counsel in the proceedings.

(c) Attendance at hearings. A hearing shall be private and shall be attended only by the parties, their representatives or counsel, witnesses while testifying, and other persons having an official interest in the proceedings: Provided, however, That where the Comptroller in his discretion, after fully considering the views of the party afforded the hearing, determines that a public hearing is necessary to protect the public interest, he may order the hearing be public.

(d) Transcript of testimony. Hearings shall be recorded and transcripts will be made available to any party upon payment of the cost thereof and, in the event the hearing is public, shall be furnished on similar payment to other interested persons. A copy of the transcript of the testimony taken at any hearing, duly certified by the reported, together with all exhibits, all papers and requests filed in the proceeding, and any briefs or memoranda of law theretofore filed in the proceeding, shall be filed with the Administrative Assistant to the Comptroller, who shall transmit the same to the hearing examiner. The Administrative Assistant shall promptly serve notice upon each of the parties of such filing and transmittal. The hearing examiner shall have authority to rule upon motions to correct the record.

(e) Order of procedure. The counsel for the Comptroller shall open and close.

(f) Continuances and changes or extensions of time and changes of place of hearing. Except as otherwise expressly provided by law, the Comptroller may by the notice of hearing or subsequent order provide time limits different from those specified in this part, and the Comptroller may, on his own initiative or for good cause shown, change or extend any time limit prescribed by these rules or the notice of hearing, or change the time and place for beginning any hearing hereunder. The hearing examiner may continue or adjourn a hearing from time

to time and, as permitted by law or agreed to by the parties, from place to place. Extensions of time for making any filing or performing any act required or allowed to be done within a specified time in the course of a proceeding may be granted by the hearing examiner for good cause shown.

(g) Call for further evidence, oral argument, briefs, reopening of hearing. The hearing exaimner may call for the production of further evidence upon any issue, may permit oral argument and submission of briefs at the hearing and, upon appropriate notice, may reopen any hearing at any time prior to the certification of his recommended decision to the Administrative Assistant. The Comptroller may order the reopening of any hearing at any time prior to the entry of his order disposing of the matter. § 19.12 Subpenas.

(a) Issuance. The hearing examiner or, in the event he is unavailable, the Comptroller, shall issue subpenas at the request of any party, requiring the attendance of witnesses or the production of documentry evidence at any designated place of hearing; except that where it appears to the hearing examiner or the Comptroller that the subpena may be unreasonable, oppressive, excessive in scope, or unduly burdensome, the party seeking the subpena may be required, as a condition precedent to the issuance of the subpena, to show the general relevance and reasonable scope of the testimony or other evidence sought. In the event the hearing examiner or the Comptroller, after consideration of all the circumstances, determines that the subpena or any of its terms are unreasonable, oppressive, excessive in scope, or unduly burdensome, he or it may refuse to issue the subpena, or issue it only upon such conditions as fairness requires.

(b) Motion to quash. Any person to whom a subpena is directed may, prior to the time specified therein for compliance but in no event more than five days after the date of service of such subpena, with notice to the party requesting the subpena, apply to the hearing examiner, or, if he is unavailable, to the Comptroller, to revoke, quash, or modify such subpena, accompanying such application with a statement of the reasons therefor.

(c) Service of subpena. Service of a subpena upon a person named therein shall be made by delivering a copy of

the subpena to such person and by tendering the fees for one day's attendance and the mileage as specified in paragraph (d) of this section, except that when a subpena is issued at the request of the Comptroller of the Currency's counsel fees and mileage need not be tendered at the time of service of the subpena. If service is made by a United States marshal, or his deputy, or an employee of the Office of the Comptroller, such service shall be evidenced by his return thereon. If made by any other person, such person shall make affidavit thereto, describing the manner in which service is made, and return such affidavit on or with the original subpena. In case of failure to make service, reasons for the failure shall be stated on the original subpena. The original subpena, bearing or accompanied by the required return, affidavit, or statement, shall be returned without delay to the hearing examiner.

(d) Attendance of witnesses. The attendance of witnesses and the production of documents pursuant to a subpena, issued in connection with a hearing, may be required from any place in any State or in any territory at any designated place where the hearing is being conducted. Witnesses subpenaed in any proceeding under this part shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States.

(e) Depositions. The Comptroller or hearing examiner, by subpena or subpena duces tecum, may order evidence to be taken by deposition in any proceeding at any stage thereof. Such depositions may be taken by the hearing examiner or before any person designated by the Comptroller or hearing examiner and having power to administer oaths. Unless notice is waived, no deposition shall be taken except after at least five days' notice to the parties to the proceeding.

(f) Application and order to take oral deposition. Any party desiring to take the oral deposition of a witness, in connection with any hearing provided for in this part, shall make application in writing to the hearing examiner or, in the event he is unavailable, to the Comptroller setting forth the reasons why such deposition should be taken, the name and post office address of the witness, the matters concerning which the witness is expected to testify, its relevance, and the time when, the place where, and the name and post office address of the person before