WEBVTT NOTE This file was generated by Descript 00:00:00.470 --> 00:00:02.410 Samantha: Hello, this is Samantha Shares. 00:00:03.030 --> 00:00:08.210 This episode covers N C U A’s Enforcement Manual Section on Removal of Officials. 00:00:08.906 --> 00:00:12.636 The following is an audio version of that advisory and the press release. 00:00:13.196 --> 00:00:16.366 This podcast is educational and is not legal advice. 00:00:16.846 --> 00:00:20.866 We are sponsored by Credit Union Exam Solutions Incorporated, whose 00:00:20.866 --> 00:00:23.886 team has over two hundred and Forty years of National Credit 00:00:23.886 --> 00:00:25.816 Union Administration experience. 00:00:26.326 --> 00:00:29.976 We assist our clients with N C U A so they save time and money. 00:00:30.506 --> 00:00:34.476 If you are worried about a recent, upcoming or in process N C U A 00:00:34.476 --> 00:00:38.856 examination, reach out to learn how they can assist at Mark Treichel DOT COM. 00:00:39.156 --> 00:00:43.486 Also check out our other podcast called With Flying Colors where we provide tips 00:00:43.486 --> 00:00:46.046 on how to achieve success with N C U A. 00:00:46.795 --> 00:00:47.695 And now the N.C.U.A. 00:00:47.695 --> 00:00:50.295 enforcement manual on removal of officials. 00:00:51.019 --> 00:00:53.209 What is an NCUA “ removal” action? 00:00:53.797 --> 00:00:57.447 A removal action is the administrative action to remove directors, 00:00:57.557 --> 00:00:59.337 officers, or committee members. 00:00:59.987 --> 00:01:04.447 This action is available as an initial course of action or as a continuation 00:01:04.447 --> 00:01:08.667 of a cease and desist order if the officials refuse to comply as directed. 00:01:09.077 --> 00:01:12.817 Whether this enforcement action is an initial course or a continuation 00:01:12.817 --> 00:01:16.247 of a cease and desist order, it is separate and has its own 00:01:16.247 --> 00:01:18.587 applicability to particular situations. 00:01:19.017 --> 00:01:23.507 Section 206(g) of the FCU Act, 12 U.S.C. 00:01:23.507 --> 00:01:29.217 section1786(g), contains NCUA's authority to issue a removal order; NCUA Rules 00:01:29.217 --> 00:01:34.647 and Regulations section747, Subpart A, contains the rules and regulations 00:01:34.647 --> 00:01:36.877 governing removal administrative hearings. 00:01:37.575 --> 00:01:42.345 It may become necessary to initiate formal removal action where a breach of fiduciary 00:01:42.345 --> 00:01:46.765 duty occurs on the part of the director, officer, or committee member and where the 00:01:46.765 --> 00:01:51.425 credit union's board will not or cannot discharge the responsible person and where 00:01:51.425 --> 00:01:53.765 that person does not voluntarily resign. 00:01:54.494 --> 00:01:59.054 Removal of a director, an officer, or a committee member is not anticipatory in 00:01:59.054 --> 00:02:01.564 nature as in a cease and desist action. 00:02:02.134 --> 00:02:06.104 Removal is appropriate only when an official committed an act that constitutes 00:02:06.104 --> 00:02:10.944 grounds for removal, i.e., it cannot be imposed for future or threatened conduct. 00:02:11.464 --> 00:02:15.644 Removal can follow only if NCUA has issued a Notice of Intent to Remove 00:02:15.694 --> 00:02:19.574 or a Notice of Suspension and Intent to Remove and after completion 00:02:19.574 --> 00:02:23.154 of the appropriate administrative proceedings as provided in the FCU 00:02:23.154 --> 00:02:25.614 Act and NCUA Rules and Regulations. 00:02:26.349 --> 00:02:30.099 NCUA may remove a person even if they voluntarily resign or are 00:02:30.099 --> 00:02:31.839 terminated by the credit union. 00:02:32.399 --> 00:02:36.559 A removal action may be brought any time up to six years after resignation, 00:02:36.639 --> 00:02:40.539 termination of employment, liquidation, or any other termination of a 00:02:40.539 --> 00:02:46.329 relationship with the credit union (see section206(k)(3) of the FCU Act, 12 U.S.C. 00:02:47.087 --> 00:02:49.687 section1786(k)(3)). 00:02:50.443 --> 00:02:53.913 Any party who has been removed or suspended from office is also 00:02:53.913 --> 00:02:57.723 automatically removed, suspended, and prohibited from participating 00:02:57.723 --> 00:03:01.583 in the affairs of any federally insured financial institution without 00:03:01.583 --> 00:03:05.053 the express written consent of the appropriate regulatory authority. 00:03:05.814 --> 00:03:06.254 1. 00:03:06.834 --> 00:03:09.044 What are the grounds for removal of an official? 00:03:09.704 --> 00:03:14.404 NCUA can remove from office any directors, officers, or committee members if: 00:03:15.245 --> 00:03:18.195 They directly or indirectly violated one of the following: 00:03:18.969 --> 00:03:20.559 ► A statute or regulation. 00:03:21.257 --> 00:03:23.647 ► A provision of a Final C&D Order. 00:03:24.400 --> 00:03:28.260 ► Any published written agreement between the NCUA Board and the credit union. 00:03:29.031 --> 00:03:33.081 ► Any condition imposed in writing by the NCUA Board related to granting any 00:03:33.081 --> 00:03:35.431 application or request by the CU (e.g. 00:03:35.681 --> 00:03:38.681 application for insurance or 208 Assistance). 00:03:39.347 --> 00:03:43.217 ► Engaged or participated in any unsafe or unsound practice 00:03:43.217 --> 00:03:44.717 related to the credit union. 00:03:45.414 --> 00:03:50.144 ► Committed or engaged in any act, omission, or practice constituting a breach 00:03:50.869 --> 00:03:51.939 of fiduciary duty. 00:03:52.715 --> 00:03:52.885 And 00:03:53.641 --> 00:03:54.761 Their actions either: 00:03:55.493 --> 00:03:57.093 ► Involved personal dishonesty. 00:03:57.809 --> 00:04:01.809 ► Demonstrated their unfitness to participate in the credit union's affairs. 00:04:02.538 --> 00:04:03.028 And 00:04:03.463 --> 00:04:06.053 Their actions resulted in at least one of the following: 00:04:06.772 --> 00:04:10.892 The credit union has or will suffer financial loss or other damage. 00:04:11.581 --> 00:04:14.341 The interests of the members have or could be prejudiced. 00:04:15.010 --> 00:04:18.490 The party receives financial gain or others benefit because of the 00:04:18.490 --> 00:04:20.690 violation, practice, or breach 00:04:21.367 --> 00:04:24.617 This concludes the NCUA Letter to credit unions on TOPIC 00:04:25.326 --> 00:04:29.466 If your Credit union could use assistance with your exam, reach out to Mark Treichel 00:04:29.466 --> 00:04:32.226 on LinkedIn, or at mark Treichel dot com. 00:04:32.796 --> 00:04:35.446 This is Samantha Shares and we Thank you for listening.