Samantha: Hello, this is Samantha Shares.
This episode covers N C U Aâs Enforcement Manual Section on Removal of Officials.
The following is an audio version of that advisory and the press release.
This podcast is educational and is not legal advice.
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And now the N.C.U.A.
enforcement manual on removal of officials.
What is an NCUA â removalâ action?
A removal action is the administrative action to remove directors,
officers, or committee members.
This action is available as an initial course of action or as a continuation
of a cease and desist order if the officials refuse to comply as directed.
Whether this enforcement action is an initial course or a continuation
of a cease and desist order, it is separate and has its own
applicability to particular situations.
Section 206(g) of the FCU Act, 12 U.S.C.
section1786(g), contains NCUA's authority to issue a removal order; NCUA Rules
and Regulations section747, Subpart A, contains the rules and regulations
governing removal administrative hearings.
It may become necessary to initiate formal removal action where a breach of fiduciary
duty occurs on the part of the director, officer, or committee member and where the
credit union's board will not or cannot discharge the responsible person and where
that person does not voluntarily resign.
Removal of a director, an officer, or a committee member is not anticipatory in
nature as in a cease and desist action.
Removal is appropriate only when an official committed an act that constitutes
grounds for removal, i.e., it cannot be imposed for future or threatened conduct.
Removal can follow only if NCUA has issued a Notice of Intent to Remove
or a Notice of Suspension and Intent to Remove and after completion
of the appropriate administrative proceedings as provided in the FCU
Act and NCUA Rules and Regulations.
NCUA may remove a person even if they voluntarily resign or are
terminated by the credit union.
A removal action may be brought any time up to six years after resignation,
termination of employment, liquidation, or any other termination of a
relationship with the credit union (see section206(k)(3) of the FCU Act, 12 U.S.C.
section1786(k)(3)).
Any party who has been removed or suspended from office is also
automatically removed, suspended, and prohibited from participating
in the affairs of any federally insured financial institution without
the express written consent of the appropriate regulatory authority.
1.
What are the grounds for removal of an official?
NCUA can remove from office any directors, officers, or committee members if:
They directly or indirectly violated one of the following:
âº A statute or regulation.
âº A provision of a Final C&D Order.
âº Any published written agreement between the NCUA Board and the credit union.
âº Any condition imposed in writing by the NCUA Board related to granting any
application or request by the CU (e.g.
application for insurance or 208 Assistance).
âº Engaged or participated in any unsafe or unsound practice
related to the credit union.
âº Committed or engaged in any act, omission, or practice constituting a breach
of fiduciary duty.
And
Their actions either:
âº Involved personal dishonesty.
âº Demonstrated their unfitness to participate in the credit union's affairs.
And
Their actions resulted in at least one of the following:
The credit union has or will suffer financial loss or other damage.
The interests of the members have or could be prejudiced.
The party receives financial gain or others benefit because of the
violation, practice, or breach
This concludes the NCUA Letter to credit unions on TOPIC
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This is Samantha Shares and we Thank you for listening.