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FEDERAL RESERVE BANK
OF NEW YORK
Circular No. 8693~1
[
November 27. 19791
RULES OF PRACTICE FOR HEARINGS
To Member Banks, and Others Concerned,
in the Second Federal Reserve District:
The Board of Governors of the Federal Reserve System has amended its hearing procedures to
incorporate certain changes that were made necessary by the expansion—under Titles I, VI, and
VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978—of the Board’s
supervisory and enforcement authority.
Enclosed is a copy of the pamphlet containing the Board’s new “Rules of Practice for Hearings,”
as revised effective September 24, 1979. This pamphlet replaces the August 1967 pamphlet entitled
“Rules of Practice for Formal Hearings.”
A copy of the Board’s notice describing the changes in the Board’s hearing procedures is also
enclosed. This notice has been reprinted from the Federal Register of October 2, 1979. Questions
regarding the hearing procedures may be directed to our Legal Department (Tel. No. 212-791-5020).
In addition, for those who have complete sets of the Board’s rules and regulations, we are
enclosing a revised table of contents for that service.
T homas M. T im len ,
F irst Vice President
BO AR D OF GO VERN O RS
o f the
F E D E R A L R E SE R V E S Y S T E M
RULES OF PRACTICE FOR HEARINGS
(12 CFR 263)
As revised effective September 24, 1979
Any inquiry relating to these rules should be addressed to the Federal
Reserve Bank of the Federal Reserve District in which the inquiry arises.
CONTENTS
Page
SUBPART A—RULES OF PRACTICE
FOR FORMAL HEARINGS
S ec . 263.1— A uthority , Purpose and S cope .
(a) Authority................................................
(b) Purpose and scope..................................
4
4
S ec . 263.2— D efinitions ....................................
4
S ec . 263.3— A ppearance and Practice
B efore the B o a r d ..............................
(a) Power of attorney and notice of appear
ance .........................................................
(b) Conduct during hearings.......................
4
5
S ec . 263.4— Notice of Hea r in g .......................
5
S ec . 263.5— A nsw er ............................................
(a) When required........................................
(b) Requirements of answer; effect of
failure to deny........................................
(c) Admitted allegations.............................
(d) Effect of failure to answ er...................
(e) Opportunity for informal settlement. ..
5
5
S ec . 263.6—C onduct of He a r in g s .................
(b) Authority of presiding officer...............
(c) Prehearing conference...........................
(d) Attendance at hearings; representation
of the Board............................................
(e) Transcript of testimony.........................
(f) Continuances and changes or exten
sions of time and changes of place of
hearing.....................................................
(g) Call for further evidence, oral argu
ment, briefs, reopening of hearing---(h) Ex parte communications.....................
6
6
6
S ec . 263.7— S ubpen a s ........................................
(a) Issuance..................................................
(b) Motion to q u a sh ....................................
(c) Service of subpena................................
(d) Attendance of witnesses.......................
8
8
8
8
8
S ec . 263.8— D epo sitions ....................................
(a) When permissible..................................
(b) Notice and application.........................
(c) Procedure on deposition; objections...
(d) Introduction as evidence.......................
(e) Payment of fees......................................
9
9
9
9
9
9
S ec . 263.9— R ules of E v id en c e .......................
(a) Evidence................................................
(b) Objections..............................................
10
10
10
Page
(c) Stipulations..........................................
(d) Official notice......................................
10
10
S ec . 263.10—Mo tio n s ........................................
10
(a)
(b)
(c)
(d)
(e)
(f)
(g)
4
In writing..............................................
Objections............................................
Oral argument; briefs..........................
Rulings on motions..............................
Appeal from rulings on motions..........
Continuation of hearing......................
Closing of hearing................................
S ec . 263.11 — Proposed F indings and C onclu
sions and R ecommended
De c is io n ........................................
(a) Proposed findings and conclusions and
supporting briefs....................................
(b) Recommended decision and filing of
record.......................................................
(c) Board as presiding officer.....................
5
5
5
5
6
7
7
2
10
10
10
10
10
10
10
11
11
11
11
S ec . 263.12—E xceptions ....................................
(a) Filin g......................................................
(b) W aiver....................................................
11
11
11
S ec . 263.13— B r ie f s ............................................
(a) Contents..................................................
(b) Answering briefs....................................
11
11
11
S e c . 263.14— O ral A rgument B efore the
B o a r d ..........................................
12
S ec . 263.15— Decision of B o a r d .....................
12
S ec . 263.16— F iling Papers ...............................
12
S ec . 263.17—S erv ic e ..........................................
(a) By the Board..........................................
(b) By the p arties........................................
12
12
12
S ec . 263.18— C o p ie s ............................................
12
S ec . 263.19—C omputing T i m e .........................
(a) General rule............................................
(b) Service by m ail......................................
12
12
12
S ec . 263.20—Documents in Proceedings
C onfidential ...........................
13
S e c . 263.21— F ormal R equirem ents as to
Papers F iled ...............................
(a) Forms.......................................................
(b) Signature................................................
(c) Caption....................................................
13
13
13
13
SUBPART B—RULES AND PROCEDURES
FOR ASSESSMENT AND COLLECTION OF
CIVIL PENALTIES
S ec . 263.22— Purpose and S co pe .....................
13
SUBPART C—RULES AND PROCEDURES
APPLICABLE TO SUSPENSION OR
REMOVAL OF A BANK OFFICIAL WHERE
A FELONY IS CHARGED OR PROVEN
S ec . 263.30— Purpose and S co pe ...........................
15
S ec . 263.23— N otice of A ssessment of C ivil
Pe n a l t y ......................................
13
S ec . 263.24— Opportunity for Informal Pro
ceed in g ........................................
13
S ec . 263.25— R elevant C onsiderations for
A ssessment of C ivil Penalty
(a) Grounds......................................................
(b) Contents..................................................
(c) Service........................................................
15
15
15
14
S ec . 263.32—R equest for Informal Hearing . . .
15
S ec . 263.26— R equest for F ormal Hearing
on A ssessm ent ...........................
S ec . 263.33—Order for Informal He a r in g ___
14
15
15
S ec . 263.27— Hearing Order on A ssessment
14
S ec . 263.28— A ssessment Or d e r .....................
14
S ec . 263.29— Payment of C ivil Pe n a l t y ___
14
S e c . 263.31— N otice or O rder of S uspension ,
Removal or Prohibition ............... 15
(a)
(b)
(c)
(d)
(e)
Issuance of hearing order..........................
Waiver of oral hearing..............................
Hearing procedures....................................
Authority of presiding officer....................
Recommendation of presiding officer . . . .
S ec . 263.34— D ecision of the B o a r d ...................
STATUTORY AUTHORITY
These rules are issued under authority of section 11 (i) of the Federal Reserve Act (12 U.S.C. 248(i)),
section 202 of the Financial Institutions Supervisory Act of 1966 (12 U.S.C. 1818(n)), section 18(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(c)), section 8 of the Clayton Act (15 U.S.C. 19), and Titles
I, VI, and VIII of the Financial Institutions Regulatory and Interest Rate Control Act of 1978 (Pub L
95-630).
16
16
16
16
16
RULES OF PRACTICE FOR HEARINGS*
(12 CFR 263)
As revised effective September 24, 1979
SUBPART A—RULES OF PRACTICE
FOR FORMAL HEARINGS
securities dealer for which the Board is the appropri
ate regulatory agency, or upon any person associated
or seeking to become associated with such a munici
pal securities dealer, under section 15(B)(c)(5) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4);
(9) formal adjudications on bank merger appli
cations under section 18(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(c)); and
(10) assessment of a civil money penalty for a
violation of any provision of: the Bank Holding
Company Act of 1956, as amended, or any order or
regulation issued thereunder (12 U.S.C. 1847(b));
sections 19, 22, or 23A of the Federal Reserve Act,
or any order or regulation issued thereunder (12
U.S.C. 504, 505); the terms of a final cease-anddesist order issued under the Federal Deposit Insur
ance Act (12 U.S.C. 1818(i)(2)); or the provisions
of 106(b)(2) of the Bank Holding Company Act
Amendments of 1970, as amended (12 U.S.C.
1972(2)(F)).
SECTION 263.1—
AUTHORITY, PURPOSE, AND SCOPE
(a) Authority. This Part is issued under sections
ll(i), 19, and 29 of the Federal Reserve Act, as
amended (12 U.S.C. 248(i), 504, and 505); sections
5(b) and 8(b) of the Bank Holding Company Act of
1956, as amended (12 U.S.C. 1844(b) and 1847(b));
section 106(b)(2)(F) of the Bank Holding Company
Act Amendments of 1970, as amended (12 U.S.C.
1972(2)(F)); sections 7(j) and 8 of the Federal Deposit
Insurance Act, as amended (12 U.S.C. 1817(j) and
1818); section 13 of the International Banking Act of
1978 (12 U.S.C. 3108); and section 158(c)(5) of the
Securities Exchange Act of 1934, as amended (15
U.S.C. 78o-4).
(b) Purpose and scope. This subpart prescribes
rules of practice and procedure governing adjudica
tions as to which a formal hearing is required by law or
is for other reason ordered by the Board. These adjudi
cations include:
(1) suspension of a member bank from the use of
credit facilities of the Federal Reserve System under
section 4 of the Federal Reserve Act (12U.S.C. 301);
(2) termination of a bank’s membership in the
Federal Reserve System under section 9 of the Federal
Reserve Act (12 U.S.C. 327);
(3) issuance of a cease-and-desist order under
section 11 of the Clayton Act (15 U.S.C. 21);
(4) issuance of a cease-and-desist order or a re
moval or suspension order under section 8 of the Fed
eral Deposit Insurance Act (12 U.S.C. 1818);
(5) adjudications under sections 2, 3, or 4 of the
Bank Holding Company Act (12 U.S.C. 1841, 1842,
or 1843);
(6) issuance of a divestiture order against a bank
holding company under section 5(e) of the Bank Hold
ing Company Act (12 U.S.C. 1844(e));
(7) disapproval of a proposed acquisition of con
trol of a State member bank or a bank holding company
under section 7(j) of the Federal Deposit Insurance Act
(12 U.S.C. 1817(j));
(8) imposition of sanctions upon any municipal
SECTION 263.2—DEFINITIONS
As used in this Part:
(a) “ Member bank” means any bank that is a
member of the Federal Reserve System.
(b) “ Party” means a person or agency named or
admitted as a party, or any person or agency who
has filed a written request and is entitled as of right
to be admitted as a party. A person or agency may
be admitted for a limited purpose without being re
garded as a party.
(c) “ Secretary” means the Secretary of the
Board of Governors of the Federal Reserve System.
SECTION 263.3—APPEARANCE AND
PRACTICE BEFORE THE BOARD
(a)
ance.
* The text corresponds to the Code o f Federal Regulations,
Title 12, Chapter II, Part 263 , cited as 12 CFR 263. The
words “ this Part” , as used herein, mean Rules o f Practice
for Hearings.
Power of attorney and notice of appear
Any person who is a member in good stand
ing of the bar of the highest court of any State or
of the District of Columbia, or of any possession,
territory, or Commonwealth of the United States,
may represent others before the Board upon filing
with the Secretary a written declaration that he is
currently qualified as provided in this paragraph,
and is authorized to represent the particular party
on whose behalf he acts. Any other person desiring
to appear before or transact business with the Board
in a representative capacity may be required to file
4
RULES OF PRACTICE
§§ 263.4— 263.5
with the Secretary a power of attorney showing his
authority to act in such capacity, and he may be
required to show to the satisfaction of the Board
that he has the requisite qualifications. Attorneys
and other representatives of parties to proceedings
shall file a written notice of appearance with the
Secretary or with the presiding officer.
(b) Conduct during hearings. All participants
in a hearing, or a conference held in connection
therewith, shall conduct themselves with dignity
and in an orderly and ethical manner. The attorney
or other representative of a party shall make every
effort to restrain a client from improper conduct in
connection with a proceeding. Improper language
or conduct, refusal to comply with directions, con
tinued use of dilatory tactics, or refusal to adhere to
reasonable standards of orderly and ethical conduct
constitute grounds for immediate exclusion from the
proceeding at the direction of the presiding officer.
the allegations contained in the notice or referenced
documents, and any party to any proceeding may
file an answer. Except where a different period is
provided by law or specified by the Board, a party
directed to file an answer, or a party who elects to
file an answer, shall file the same with the Secre
tary 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 sufficient information to admit or deny
each allegation in the notice of hearing. A state
ment of lack of information shall have the effect of
a denial. Any allegation not denied shall be deemed
to be admitted. When the party intends to deny
only a part or a qualification of an allegation, he
shall admit 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
or referenced documents, 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, and together with
the notice and any referenced documents will pro
vide a record basis on which the presiding officer
shall file with the Secretary his recommended deci
sion and his findings of fact and conclusions of
law. Such admission shall not constitute a waiver
of the right of such party to file with the Secretary
exceptions to such recommended decision, findings
and conclusions.
(d) Effect of failure to answer. Failure of a par
ty to file an answer required by this section within
the time provided shall constitute a waiver of his
right to appear and contest the allegations of the
notice of hearing and shall constitute authorization
for the presiding officer, without further notice to
the party, to find the facts to be as alleged in the
notice and to file with the Secretary a recom
mended decision containing such findings and
appropriate conclusions. The Board or the presiding
officer may, for cause shown, permit the filing of
an answer after the prescribed time.
(e) Opportunity for informal settlement. Any
interested party may at any time submit to the Sec
retary, for consideration by the Board, written
offers or proposals for settlement of a proceeding,
without prejudice to the rights of the parties. No
SECTION 263.4— NOTICE OF HEARING
Whenever a hearing is ordered by the Board,
notice of such hearing (together with a copy of any
document incorporated therein by reference) shall
be given by the Secretary or other designated offi
cer acting for the Board to the party or parties to
the proceeding and to the appropriate financial in
stitution supervisory authority where required by
law. The Board may give whatever additional
notice is deemed appropriate in any given hearing.
Such notice shall state the time, place, and nature
of the hearing, the legal authority and jurisdiction
under which the hearing is to be held, and the
name and address of the presiding officer, if one
has been designated, and shall also contain, or in
corporate by appropriate reference, a statement of
the matters of fact or law constituting the grounds
for the hearing. Unless otherwise provided by law
or ordered by the Board, notice of any hearing shall
be given not less than 20 days prior to the date set
for hearing and shall be given general circulation
by publication in the Federal Register and, where
practical, by release to the press. The Board may
amend a notice of hearing in any manner and to the
extent consistent with provisions of applicable law.
SECTION 263.5—ANSWER
(a) When required. In any notice of hearing
issued by the Board, the Board may direct the party
or parties afforded the hearing to file an answer to
5
§§ 263.5— 263.6
RULES OF PRACTICE
simplification of issues or for any other proper pur
pose; and
(7)
To consider and rule upon, as justice may
require, all procedural and other motions appropri
ate in an adversary proceeding, except that a presi
ding officer other than the Board shall not have
power to decide any motion to dismiss the proceed
ings or other motion which would result in final
determination of the merits of the proceedings.
Without limitation on the foregoing, the presi
ding officer shall, subject to the provisions of this
Part, have all the authority set forth in section
556(c) of Title 5 of the United States Code.
offer 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 paragraph shall not preclude set
tlement of any proceeding through the regular ad
judicatory process by the filing of an answer as
provided in paragraph (c) of this section, or by the
submission of the case to the presiding officer on a
stipulation of facts and an agreed order.
SECTION 263.6—CONDUCT OF HEARINGS
(1) When evidence is to be taken in a hearing,
the Board or, when duly designated by the Board
for that purpose, one or more of its members, an
administrative law judge, or other hearing officer(s)
lawfully appointed by the Board may preside at the
hearing. Unless otherwise provided in the notice of
hearing, all hearings for the taking of evidence
shall be conducted as hereinafter provided.
(2) Except as authorized by law, the presiding
officer shall not be responsible to, or subject to the
supervision or direction of, any officer, employee,
or agent of the Board engaged in the performance
of investigative or prosecuting functions.
(3) A designated presiding officer who deems
himself disqualified may at any time withdraw.
Upon receipt of a timely and sufficient affidavit of
personal bias or disqualification of such presiding
officer, the Board will rule on the matter as a part
of the record and decision in the case.
(b) Authority of presiding officer. All hearings
governed by this Part shall be conducted in accord
ance with the provisions of chapter 5 of Title 5 of
the United States Code. The presiding officer 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 offi
cer shall have all powers necessary to that end, in
cluding but not limited to 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
(c) Prehearing conference. The presiding offi
cer may, on his own initiative or at the request of
Board counsel or of any party, direct all parties or
counsel 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 and 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 dis
closure 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 presid
ing officer, need not be recorded, but the presiding
officer shall enter in the record an order which re
cites the results of the conference. Such order, a
copy of which shall be served on each party and
Board counsel, shall include the officer’s rulings
upon matters considered at the conference, together
with appropriate directions, if any, to the parties
and Board counsel; and such order shall control the
subsequent course of the proceedings, unless mod
ified at the hearing, for good cause found, by
appropriate order of the presiding officer.
(d) Attendance at hearings; representation of
the Board. Unless otherwise specifically provided
by statute or by rule of the Board, a hearing shall
ordinarily be private and shall be attended only by
the parties, their representatives or counsel, repre
sentatives of the Board, witnesses while testifying,
and other persons having an official interest in the
6
§§ 263.6
RULES OF PRACTICE
proceedings: Provided, however, That on written
request by a party or a representative of the Board,
or on the Board’s own motion, the Board, in its
discretion and to the extent permitted by law, may
permit other persons to attend or may order the
hearing to be public. In connection with any such
hearing or proceeding related thereto, the Board
may designate as Board counsel an attorney from
its staff or other attorney who shall represent the
Board. For the purposes of these Rules, any attor
ney so designated is referred to as “ Board coun
sel’ ’ . In case of adjudication other than initial
licensing proceedings, neither Board counsel nor
any officer or employee of the Board who has en
gaged in the performance of any investigative or
prosecutive function in the case, or a factually re
lated case, may participate in or advise as to the
presiding officer’s recommended decision or the
Board’s decision, except as witness or counsel in
such hearing or related proceeding. Proceedings
with respect to applications for initial licenses shall
include, but not be limited to, applications for
Board approval under section 3 of the Bank Hold
ing Company Act of 1956 (12 U.S.C. 1842) and
such proceedings as may be ordered by the Board
with respect to applications under section 18(c) of
the Federal Deposit Insurance Act (12 U.S.C.
1828(c)). In such initial licensing proceedings,
Board counsel shall represent the Board in a nonad
versary capacity for the purpose of developing for
the record information relevant to the issues to be
determined by the presiding officer and the Board.
(e) Transcript of testimony. Hearings shall be
recorded and transcripts will be made available at
prescribed rates to any party and, in the event the
hearing is public, to any other interested persons.
The presiding officer shall have authority to order
the record corrected, either upon motion to correct,
upon stipulation of the parties, or, following notice
to the parties, upon the presiding officer’s initia
tive. The transcript of testimony taken at any hear
ing, duly certified by the reporter, together with all
exhibits, papers, and requests, briefs or memoranda
of law filed in connection with the hearing shall be
filed in duplicate with the Secretary by the presid
ing officer. The Secretary shall promptly serve
notice upon each of the parties of such filing and
transmittal. Following the service of notice of filing
of the record, the record shall be returned to the
presiding officer.
(f) Continuances and changes or extensions of
time and changes of place of hearing. Except as
otherwise expressly provided by law, the Board
may by the notice of hearing or subsequent order
provide time limits different from those specified in
this Part, and may, on its own initiative or for good
cause shown, change or extend any time limit pre
scribed by these Rules or the notice of hearing, or
change the time or place for beginning any hearing
hereunder. The presiding officer may, for good
cause shown, and as permitted by law, change the
time or place for beginning such hearing and may
continue or adjourn a hearing from time to time or
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 hearing may be granted by the presiding
officer for good cause shown.
(g) Call for further evidence, oral argument,
briefs, reopening of hearing. The presiding officer
may call for the production of further evidence
upon any issue, may permit oral argument, the sub
mission of briefs at the hearing and, upon appropri
ate notice, may reopen any hearing at any time
prior to the certification of his recommended deci
sion to the Secretary. The Board may reopen the
record at any time permitted by law.
(h) Ex parte communications. For the purposes
of this section, “ ex parte communication” means
an oral or written communication that is not on the
public record and for which reasonable prior notice
to all parties has not been given, but does not in
clude requests for status reports. The following pro
hibitions against any ex parte communication apply
from the time of issuance of a notice for a formal
hearing in the proceeding or from the time the per
son responsible for the communication has know
ledge that a notice for a hearing will be issued.
(1) No member of the Board nor the presiding
officer nor any other person who is, or may reason
ably be expected to be, involved in the decisional
process in a proceeding conducted under this sub
part shall make, or knowingly cause to be made, an
ex parte communication relevant to the merits of
the proceeding to any interested person outside the
Federal Reserve System. Any member of the
Board, the presiding officer, or other person who
receives, makes, or knowingly causes to be made
any ex parte communication prohibited by this par
agraph shall place on the public record of the pro
ceeding:
(i) all such written communications;
(ii) memoranda stating the substance of all
such oral communications; and
7
RULES OF PRACTICE
§§ 263.6— 263.7
therein for compliance, but in no event more than
(iii)
all written responses, and memoranda
five days after the date of service of such subpena,
stating the substance of all oral responses, to the
with notice to the party requesting the subpena,
materials described in clauses (i) and (ii) of this
apply to the presiding officer or, if he is unavail
sentence.
able, to the Board, to revoke, quash, or modify
(2) No interested person outside the Federal
such subpena, accompanying such application with
Reserve System shall make, or knowingly cause to
a statement of the reasons therefor.
be made, an ex parte communication relevant to the
(c) Service of subpena.
merits of a proceeding conducted under this subpart
(1) Service of a subpena may be made by per
to any member of the Board, to the presiding offi
sonal service or, except as otherwise required by
cer or to anyone who is, or may reasonably be ex
law, by registered mail addressed to the last known
pected to be, involved in the decisional process in
address of the person named in the subpena and by
the proceeding. Upon receipt of a communication
tendering the fees for one day’s attendance and
in violation of this paragraph, the Board or the
mileage as specified in paragraph (d) of this sec
presiding officer may require the party responsible
tion. In making personal service of a subpena, the
for the ex parte communication to show cause why
original shall be exhibited to, and a copy thereof
that party’s claim or interest in the proceeding
left with, the person named in the subpena. Service
should not be dismissed, denied, disregarded, or
of the subpena and tender of fees to a natural per
otherwise adversely affected on account of the
son may also be made by leaving a copy of the
violation. To the extent consistent with the interests
subpena and fees at the person’s dwelling place or
of justice and the policy of the statute under which
usual place of abode with someone of suitable age
the hearing is being held, a knowing violation of
or discretion. When the person to be served is not a
this paragraph may constitute sufficient grounds for
natural person, delivery of a copy of the subpena
a decision adverse to the responsible party.
and tender of the fees may be effected by handing
(3) Except as authorized by law, the presiding
them to a registered agent for service or to an offi
officer shall not consult any person or party on any
cer, director, or agent in charge of any office of the
fact in issue unless notice and opportunity is given
person, or by mailing them by registered mail to
for all parties to participate.
such representative at that person's last known
address.
SECTION 263.7—SUBPENAS
(2) Service made by a United States marshal
(a) Issuance. Where authorized by law, subor his deputy shall be evidenced by that person’s
penas for the attendance of witnesses or for the pro
return on the original subpena. If made by any
duction of documentary evidence, unless directed
other person, that person shall make affidavit there
by the Board upon its own motion, will issue only
to, describing the manner in which service was
upon application in writing to the presiding officer
made, and return the affidavit on or with the origi
or, in the event he is unavailable, to the Board,
nal subpena. In case of failure to make service, the
except that during sessions of a hearing, such appli
reasons for the failure shall be stated on the original
cation may be made orally on the record before the
subpena. The original subpena, bearing or accom
presiding officer. The person seeking the subpena
panied by the required return, affidavit, or state
may be required, as a condition precedent to the
ment, shall be returned without delay to the Secre
tary or, if so directed on the subpena, to the presi
issuance of the subpena, to show the general rele
ding officer before whom the person named in the
vance and reasonable scope of the testimony or
other evidence sought. In the event the presiding
subpena is required to appear.
officer or the Board, after consideration of all the
(d) Attendance of witnesses.
circumstances, determines that the requested sub
(1) The attendance of witnesses and the pro
pena or any of its terms is unreasonable, oppres
duction of documents pursuant to a subpena issued
sive, excessive in scope, unduly burdensome, or
in connection with a hearing under this subpart may
otherwise improper, he or it may refuse to issue the
be required from any State or territory or any other
subpena, or issue it only upon such conditions as
place subject to the jurisdiction of the United States
at any designated place where the hearing is being
fairness requires.
(b) Motion to quash. Any person to whom a
conducted. Any person who is compelled to appear
subpena is directed may, prior to the time specified
and testify, or who appears and testifies by request
8
§§ 263.7— 263.8
RULES OF PRACTICE
or permission, may be accompanied, represented,
(c) Procedure on deposition; objections.
or advised by counsel.
(1) Each witness testifying upon oral deposi
(2)
Subpenaed witnesses shall be paid the tion shall be duly sworn or shall affirm, and Board
same fees and mileage that are paid witnesses in
counsel and any adverse party shall have the right
the district courts of the United States. When a subto cross-examine the witness. Objections to ques
pena is issued upon the Board’s own motion or at
tions or documents shall be in short form, stating
the request of Board counsel, fees and mileage
the grounds of objection relied upon. The person
need not be tendered at the time of service of the
recording the deposition shall not have any author
subpena. Fees required by this paragraph shall be
ity to rule upon questions of competency, material
paid by the person upon whose application the sub
ity, or relevancy of evidence. Evidence objected to
pena is issued.
shall be taken subject to the objection. Failure to
object to questions or evidence shall not be deemed
a waiver unless the ground of the objection is one
SECTION 263.8—DEPOSITIONS
which might have been obviated or removed if pre
(a) When permissible. The Board or presiding
sented at the time of the question or submission of
officer, upon its or his own motion or upon appro
evidence.
priate application by a party to the proceeding or
(2) All questions, answers, and objections (but
Board counsel, may, by subpena or subpena duces
not including argument or debate) shall be recorded
tecum, order evidence to be taken by deposition at
by, or under the direction of, the officer before
any stage of any proceeding in which such deposi
whom the deposition is taken. The deposition shall
tions are authorized. Depositions may be taken be
be subscribed to by the witness, unless the parties
fore the presiding officer or before any person des
by stipulation waive the signing or unless the wit
ignated in the subpena and having the power to
ness is physically unable to sign, cannot be found,
administer oaths.
or refuses to sign. The person recording the deposi
(b) Notice and application. Unless notice is
tion shall certify the transcript of the deposition as
waived, no deposition shall be taken except after at
true and complete. If the deposition is not sub
least five days’ written notice to Board counsel and
scribed to by the witness, the person recording the
the parties to the proceeding or their attorneys of
testimony shall state this fact and the reason there
record and to the Board. In such notice and appli
for on the record.
cation to take evidence by deposition, the party de
(3) The officer before whom the deposition is
siring to take the deposition shall state the name
taken shall promptly deliver, or send by registered
and post office address of the witness, the subject
mail, the original of the deposition, together with
matter concerning which the witness is expected to
the original of all exhibits, to the Secretary of the
testify, its relevance, the time, place, and the name
Board unless otherwise directed in the order author
and post office address of the person before whom
izing the taking of the deposition or in the notice of
it is desired the deposition be taken, and the reason
its issuance. Interested parties shall make their own
why such deposition should be taken. Thereupon,
arrangements with the person recording the testi
the presiding officer or the Board may, in his or its
mony for copies of the deposition and exhibits.
discretion, by subpena or subpena duces tecum,
(d) Introduction as evidence. Subject to
order the oral deposition to be taken. Such subpena
appropriate rulings by the presiding officer on such
will name the witness whose deposition is to be
objections and answers as were noted at the time
taken and specify the time when, the place where,
the deposition was taken or as would be valid were
and the person before whom the witness is to tes
the witness personally present and testifying, the
tify, but such time and place, and the person before
deposition or any part thereof may be received in
whom the deposition is ordered to be taken, may or
evidence by the presiding officer. Only such part of
may not be the same as those named in the notice
a deposition as is received in evidence at a hearing
and application. Notice of the issuance of such sub
shall constitute a part of the record in such proceed
pena shall be served upon each of the parties a
ing upon which a decision may be based.
reasonable time in advance of the time fixed for the
(e) Payment of fees. Deponents whose oral de
taking of the deposition, but in no event less than
positions are taken and the reporter taking the same
five days in advance of such time.
shall be entitled to the same fees as are paid for
9
RULES OF PRACTICE
§§ 263.9— 263.10
grounds therefor. When a motion is addressed to
the presiding officer, an original and two copies of
such motion shall be filed.
(b) Objections. Within five days after service of
any written motion, or within such other period as
may be fixed by the presiding officer or the Board,
any party may file a written answer or objection to
such motion, together with two copies thereof. The
moving party shall have no right to reply, except as
permitted by the presiding officer or the Board. The
presiding officer or the Board, in his or its discre
tion, may waive the requirements of this section as
to motions for extensions of time, and may rule
upon such motions ex parte.
(c) Oral argument; briefs. No oral argument
will be heard on motions except as otherwise
directed by the presiding officer or the Board. Writ
ten memoranda or briefs may be filed with motions
or answers or objections, stating the points and au
thorities relied upon in support of the position
taken.
(d) Rulings on motions. Except as otherwise
provided in this Part, the presiding officer shall rule
upon all motions properly addressed to him and
upon such other motions as the Board may direct,
except that if the presiding officer finds that a
prompt decision by the Board on a motion is essen
tial to the proper conduct of the proceeding, he
may refer such motion to the Board for decision.
The Board shall rule upon all motions properly sub
mitted to it for decision.
(e) Appeal from rulings on motions. All mo
tions and answers or objections and rulings thereon
shall become part of the record. The rulings of a
presiding officer on any motion may not be
appealed to the Board prior to its consideration of
the presiding officer’s recommended decision, find
ings, and conclusions except by special permission
of the Board, but shall be considered by the Board
in reviewing the record. Requests to the Board for
special permission to appeal from such rulings of
the presiding officer shall be filed promptly, in
writing, and shall briefly state the grounds relied
on.
(f) Continuation of hearing. Unless otherwise
ordered by the presiding officer or the Board, the
hearing shall continue pending the determination of
any motion by the Board.
(g) Closing of hearing. The record of the hear
ing shall be closed by announcement to that effect
by the presiding officer when the taking of evi
dence has been concluded. In the discretion of the
like services in the courts of the United States,
which fees shall be paid by the person upon whose
application the deposition is taken.
SECTION 263.9—RULES OF EVIDENCE
(a) Evidence. Every party shall have the right to
present his case or defense by oral and documen
tary evidence, to submit rebuttal evidence and to
conduct such cross-examination as may be required
for a full and true disclosure of the facts. Irrele
vant, immaterial, or unduly repetitious evidence
shall be excluded.
(b) Objections. Objections to the admission or
exclusion of evidence shall be in short form, stating
the grounds of objections relied upon, and the
transcript shall not include argument except as
ordered by the presiding officer. Rulings on such
objections and on any other matters shall be a part
of the transcript. Failure to object to admission or
exclusion of evidence or to any ruling shall be con
sidered a waiver of such objection, but no excep
tion to a ruling on an objection need be noted be
fore the presiding officer in order to urge the same
in the consideration of the matter by the Board.
(c) Stipulations. Independently of the orders or
rulings issued as provided by § 263.6 (c), the par
ties and Board counsel may stipulate as to any
relevant matters of fact or the authenticity of any
relevant documents. Such stipulations may be re
ceived in evidence at a hearing, and when so re
ceived shall be binding on the parties and Board
counsel with respect to the matters therein stipu
lated.
(d) Official notice. All matters officially noticed
by the presiding officer shall appear on the record.
SECTION 263.10—MOTIONS
(a) In writing. An application or request for an
order or ruling not otherwise specifically provided
for in this Part shall be made by motion. After a
presiding officer has been designated and before the
filing with the Secretary of his recommended deci
sion, pursuant to § 263.11, such applications or re
quests shall be addressed to and filed with him. At
all other times motions shall be addressed to the
Board and filed with the Secretary. Motions shall
be in writing, except that a motion made at a ses
sion of a hearing may be made orally upon the rec
ord unless the presiding officer directs that it be
reduced to writing. All written motions shall state
with particularity the order or relief sought and the
10
§§ 263.11— 263.13
RULES OF PRACTICE
presiding officer, the record may be closed as of a
future date in order to permit the admission into the
record, under circumstances determined by the
presiding officer, of exhibits to be prepared.
fact, and conclusions of law will be omitted. In
such proceedings the proposed findings and conclu
sions of law, briefs and other submissions permitted
under § 263.11(a) shall be filed with the Secretary
for consideration by the Board.
SECTION 263.11—PROPOSED FINDINGS
AND CONCLUSIONS AND
RECOMMENDED DECISION
SECTION 263.12—EXCEPTIONS
(a) Filing. Within 15 days after service of the
recommended decision and findings and conclu
sions of the presiding officer, or such further time
as the Board for good cause shall determine, any
party or Board counsel may file with the Secretary
exceptions thereto or to any part thereof, or to the
failure of the presiding officer to make any recom
mendation, finding, or conclusion, or to the admis
sion or exclusion of evidence, or other ruling of the
presiding officer, supported by such brief as may
appear advisable. In any proceeding where the
Board or one or more of its members is the presi
ding officer, the provisions of this section will not
be applicable.
(b) Waiver. Failure to file exceptions to the rec
ommended decision of the presiding officer or any
portion thereof, or to his failure to adopt a pro
posed finding or conclusion, or the admission or
exclusion of evidence or other ruling of the presi
ding officer, within the time prescribed in paragraph
(a) of this section, shall be deemed to be a waiver
of objection.
Proposed findings and conclusions and
supporting briefs. Board counsel or any party who
(a)
may wish to file with the presiding officer proposed
findings and conclusions of law shall file the same,
with two copies thereof, within 15 days after the
receipt of written notice from the Secretary advising
that the transcript has been filed with the Secretary.
Proposed findings and conclusions shall be sup
ported by citation to any relevant authorities and by
page references to any relevant portions of the re
cord and, in addition, may be accompanied by a
brief in support thereof. In initial licensing proceed
ings, in lieu of proposed findings and conclusions
of law, and within such time as the presiding offi
cer may allow, Board counsel may submit com
ments with respect to the evidence of record and/or
proposed findings and conclusions of law submitted
by any party.All such proposed findings and con
clusions of law, briefs and other submissions shall
become part of the record.
(b) Recommended decision and filing of rec
ord. In a proceeding in which the Board or one or
more of its members has not presided at the recep
tion of evidence, the presiding officer shall, within
45 days after the expiration of the time allowed for
the filing of proposed findings and conclusions, or
within such other time as the Board for good cause
shall prescribe, file with the Secretary and certify to
the Board for decision the entire record of the hear
ing, which shall include his recommended decision
and findings of fact and conclusions of law, the
transcript, exhibits (including on request of any of
the parties any exhibits excluded from evidence or
tenders of proof), exceptions, rulings, and all briefs
and memoranda filed in connection with the hear
ing. Promptly upon such filing the Secretary shall
serve upon each party to the proceeding a copy of
the presiding officer’s recommended decision, and
findings and conclusions.
(c) Board as presiding officer. In proceedings
in which the Board or one or more of its members
has presided at the reception of evidence, the pre
siding officer’s recommended decision, findings of
SECTION 263.13— BRIEFS
(a) Contents. All briefs shall be confined to the
particular matters in issue. Each proposed finding,
conclusion, or exception which is briefed shall be
supported by a concise supporting statement or by
citation of relevant statutes, regulations, decisions,
or other authorities and by page reference of rel
evant portions of the record or recommended deci
sion of the presiding officer. If the exception relates
to the admission or exclusion of evidence, the sub
stance of the evidence admitted or excluded shall
be set forth in the brief with appropriate page refer
ences to the transcript.
(b) Answering briefs. Answering briefs may be
filed within 10 days after service of briefs and shall
be confined to matters in the original briefs of
opposing parties. Further briefs may be filed with
the presiding officer only with his permission or
that of the Board, and may be filed with the Board
only with its permission.
11
§§ 263.14— 263.19
RULES OF PRACTICE
SECTION 263.14— ORAL ARGUMENT
BEFORE THE BOARD
address as shown on the records of the Board. Such
service may also be made in such other manner
reasonably calculated to give actual notice as the
Board may by regulation or otherwise provide.
(b) By the parties. All documents or papers
filed in a proceeding under this Part shall be served
by the party filing the same upon Board counsel
and the attorneys or representatives of record of all
other parties, or, if any party is not so represented,
then upon such party. Such service may be made
by personal service or by registered, certified, or
regular first-class mail addressed to the last known
address of such parties, or their attorneys or repre
sentatives of record. All such documents or papers,
when tendered to the Board or the presiding officer
for filing, shall contain a certificate of service.
Upon its own initiative, or upon written request
by any party or Board counsel, the Board, in its
discretion, may order the matter to be set down for
oral argument before the Board or one or more
members thereof. Any request for oral argument by
a party filing exceptions shall be made within the
time prescribed for filing such exceptions, or, by
any other party, within the time prescribed for the
filing of an answering brief. Oral argument before
the Board shall be recorded unless otherwise
ordered by the Board.
SECTION 263.15—DECISION OF BOARD
Appropriate members of the Board’s staff who
are not engaged in the performance of investigative
or prosecuting functions in the case, or in a factual
ly related case, may advise and assist the Board in
the consideration of the case and in the preparation
of appropriate documents for its disposition. Copies
of the decision and order of the Board shall be
served by the Secretary upon the parties to the pro
ceedings and furnished to such other persons as the
Board may direct or the law may require.
SECTION 263.18—COPIES
Unless otherwise specifically provided in the
notice of hearing, an original and seven copies of
all documents and papers required or permitted to
be filed or served upon the Secretary under this
Part shall be furnished to the Secretary, except that
an original and only one copy of the transcript of
testimony and exhibits shall be filed with the Sec
retary by the presiding officer. All documents and
papers filed with the presiding officer shall be filed
in duplicate.
SECTION 263.16— FILING PAPERS
Recommended decisions, exceptions, briefs and
other papers required to be filed with the Board or
Secretary in any proceedings shall be filed with the
Secretary, Board of Governors of the Federal Re
serve System, Washington, D.C. 20551. Any such
papers may be sent to the Secretary by mail or ex
press but must be received in the office of the
Board in Washington, D.C., within the time limit
for such filing.
SECTION 263.19—COMPUTING TIME
(a) General rule. In computing any period of
time prescribed or allowed by this Part, the date of
the act, event or default from which the designated
period of time begins to run is not to be included.
The last day so computed is to be included, unless
it is a Saturday, Sunday or legal holiday in the Dis
trict of Columbia, in which event the period shall
run until the end of the next day which is neither a
Saturday, Sunday nor legal holiday. Intermediate
Saturdays, Sundays, and legal holidays shall be in
cluded in the computation unless the time within
which the act is to be performed is 10 days or less,
in which event Saturdays, Sundays, and legal holi
days shall not be included. Half holidays shall not
be considered as holidays.
(b) Service by mail. Whenever any party has
the right or is required to do some act within a
period of time prescribed in this Part, after the ser
vice upon him of any document or other paper of
any kind, and such service is made by mail, three
SECTION 263.17—SERVICE
(a) By the Board. All documents or papers re
quired to be served by the Board shall be served by
the Secretary unless some other person shall be des
ignated for such purpose by the Board. Such ser
vice, except for service on Board counsel, shall be
made by personal service or by registered mail on
the attorney or representative of record of the party,
addressed to the last known address as shown on
the records of the Board, provided that if there is
no attorney or representative of record, such service
shall be made upon such party at the last known
12
§§ 263.20— 263.24
RULES OF PRACTICE
days shall be added to the prescribed period from
the date when the matter served is deposited in the
United States mail.
under, (12 U.S.C. 504 and 505); (c) any provision
of the Bank Holding Company Act of 1956, as
amended, or any regulation or order issued there
under, (12 U.S.C. 1847(b)); or (d) the provisions
of section 106(b)(2) of the Bank Holding Company
Act Amendments of 1970, as amended (12 U.S.C.
1972(2)(F)). The rules and procedures of this sub
part do not apply to the assessment of a civil penal
ty for a violation of the Change in Bank Control
Act, (12 U.S.C. 1817(j)). A civil money penalty
for a violation of that statute may be assessed in
accordance with the procedures set forth in 12
U.S.C. 1817 (j)(15).
SECTION 263.20—DOCUMENTS IN
PROCEEDINGS CONFIDENTIAL
Unless and until otherwise ordered by the Board
or unless otherwise provided by statute or by Board
regulation, the notice of hearing, the transcript, the
proposed findings and conclusions, the recom
mended decision of the presiding officer, excep
tions thereto, the findings and conclusions of the
Board and other papers which are filed in connec
tion with any hearing shall not be made public, and
shall be for the confidential use only of the Board
and its staff, the presiding officer, the parties and,
where appropriate, other supervising authorities.
SECTION 263.23—NOTICE OF
ASSESSMENT OF
CIVIL PENALTY
Civil penalty proceedings commence with the
issuance by the Board of a notice of assessment of
civil penalty. The notice of assessment shall state:
(a) the legal authority for the assessment; (b) the
amount of the civil penalty being assessed; (c) the
date by which the civil penalty shall be paid; (d)
the matters of fact or law constituting the grounds
for assessment of the civil penalty; (e) the right of
the person being assessed to a formal hearing to
challenge the assessment; and (f) the time limit to
request such a formal hearing. The notice of assess
ment may be served upon the person being assessed
by personal service, by registered or certified mail
to the person’s last known address, or by other
appropriate means. Such service constitutes
issuance of the notice.
SECTION 263.21—FORMAL REQUIRE
MENTS AS TO PAPERS FILED
(a) Forms. All papers filed under this subpart
shall be printed, typewritten, or otherwise repro
duced. All copies shall be clear and legible.
(b) Signature. All papers shall be dated and
signed by the party filing the same, or his duly au
thorized agent or attorney, or Board counsel, and,
except in the case of Board counsel, shall indicate
the address of the signer.
(c) Caption. All papers filed must include at the
head thereof, or on a title page, the name of the
Board and of the filing party, the title of the pro
ceeding, and the subject of the particular paper.
SECTION 263.24— OPPORTUNITY FOR
INFORMAL PROCEEDING
SUBPART B—RULES AND PROCEDURES
FOR ASSESSMENT AND COLLECTION OF
CIVIL PENALTIES
In the sole discretion of the Board’s General
Counsel, the General Counsel may, prior to the
issuance by the Board of a notice of assessment of
civil penalty, advise the affected person that the
issuance of a notice of assessment of civil penalty
is being considered and the reasons and authority
for the proposed assessment. The General Counsel
may provide the person an opportunity to present
written materials or request a conference with mem
bers of the Board’s staff to show that the penalty
would not be assessed or, if assessed, should be
reduced in amount.
SECTION 263.22—PURPOSE AND SCOPE
The rules and procedures specified in this subpart
and in Subpart A are applicable to proceedings by
the Board to assess and collect civil money penal
ties for a violation of: (a) the terms of a final ceaseand-desist order issued under the Federal Deposit
Insurance Act (12 U.S.C. 1818(i)(2)); (b) the provi
sions of sections 19, 22, or 23A of the Federal Re
serve Act, or any regulation or order issued there
13
RULES OF PRACTICE
§§ 263.25— 263.29
SECTION 263.28—ASSESSMENT ORDER
SECTION 263.25—RELEVANT
CONSIDERATIONS FOR
ASSESSMENT OF
CIVIL PENALTY
(a) In the event of consent of the parties con
cerned to an assessment, or if, upon the record
made at a hearing ordered under this subpart, the
Board finds that the grounds for having assessed
the penalty have been established, the Board may
issue an order of assessment of civil penalty. In its
order, the Board may reduce the amount of the
penalty specified in the notice of assessment. Any
party afforded a hearing under this subpart who
does not appear at the hearing (personally or by a
duly authorized representative) shall be considered
to have waived the right to a formal hearing and to
have consented to the assessment of the civil penal
ty specified in the notice of assessment.
(b) An assessment order is effective immediately
upon issuance, or upon such other date as may be
specified therein, and shall remain effective and en
forceable until it is stayed, modified, terminated, or
set aside by action of the Board or a reviewing
court.
(c) An assessment order may be served by per
sonal service, by registered or certified mail to the
last known address of the person being assessed, or
by other appropriate means.
In determining the amount of the penalty to be
assessed, the Board will take into account the
appropriateness of the penalty with respect to the
financial resources and good faith of the person
charged, the gravity of the violation, the history of
previous violations, the economic benefit derived
by the person from the violation, and such other
matters as justice may require.
SECTION 263.26—REQUEST FOR
FORMAL HEARING ON
ASSESSMENT
A person being assessed may request a formal
hearing to challenge the assessment of a civil penal
ty. The request must be made within ten business
days after issuance of the notice of assessment and
any such request must be filed in writing with the
Secretary, Board of Governors of the Federal Re
serve System, Washington, D.C. 20551. If a re
quest for a formal hearing is not filed within this
ten-day period, the person being assessed shall be
deemed to have waived the right to a formal hear
ing, and the notice of assessment shall constitute a
final and unappealable assessment order.
SECTION 263.29—PAYMENT OF
CIVIL PENALTY
(a) The date designated in the notice of assess
ment for payment of the civil penalty will normally
be 60 days from the issuance of the notice. If,
however, the Board finds, in a specific case, that
the purposes of the authorizing statute would be
better served if the 60 day period is changed, the
Board may shorten or lengthen the period or make
the civil penalty payable immediately upon receipt
of the notice of assessment. If a timely request for
a formal hearing to challenge an assessment of civil
penalty is filed, payment of the penalty shall not be
required unless and until the Board issues a final
order of assessment following the hearing. If an
assessment order is issued, it will specify the date
by which the civil penalty should be paid or col
lected.
(b) Checks in payment of civil penalties should be
made payable to the ‘Board of Governors of the
Federal Reserve System.” Upon collection, the
Board shall forward the amount of the penalty to the
Treasury of the United States.
SECTION 263.27—HEARING
ORDER ON ASSESSMENT
After the receipt of a timely request for a hearing
with respect to the assessment of a civil penalty,
the Secretary will promptly issue an order directing
a hearing to commence within 30 days from the
date of the hearing order at such place as the Sec
retary may designate with due regard for the in
terests of all parties. The hearing order may require
the person requesting the hearing to file an answer
as prescribed in section 263.5 of Subpart A. The
procedures of the Administrative Procedure Act (5
U.S.C. §§ 554-557) and Subpart A of these Rules
shall apply to the hearing.
14
§§ 263.30— 263.33
RULES OF PRACTICE
SUBPART C—RULES AND PROCEDURES
APPLICABLE TO SUSPENSION OR
REMOVAL OF A BANK OFFICIAL WHERE
A FELONY IS CHARGED OR PROVEN
pension, removal, or prohibition and shall inform
the bank official of the right to request in writing,
within 30 days of service of the notice or order, an
opportunity to show at an informal hearing that
continued service to, or participation in the conduct
of the affairs of the bank does not and is not likely
to pose a threat to the interests of the bank’s de
positors or threaten to impair public confidence in
the bank. A notice of suspension or prohibition
shall remain in effect until the criminal charge upon
which the notice is based is finally disposed of or
until the notice is terminated by the Board.
(c)
Service. The notice or order shall be served
upon the bank concerned, whereupon the bank offi
cial shall immediately cease service to the bank or
further participation in any manner in the conduct
of the affairs of the bank. A notice or order of sus
pension, removal, or prohibition may be served by
personal service, by registered or certified mail to
the last known address of the person being served,
or by other appropriate means.
SECTION 263.30—PURPOSE AND SCOPE
The rules and procedures set forth in this subpart
apply to informal hearings afforded to any officer,
director, or other person participating in the con
duct of the affairs of a State member bank (“ bank
official” ), who has been suspended or removed
from office or prohibited from further participation
in any manner in the conduct of the bank’s affairs
by a notice or order issued by the Board upon the
grounds set forth in section 8(g) of the Federal De
posit Insurance Act (12 U.S.C. 1818(g)).
SECTION 263.31—NOTICE OR
ORDER OF SUSPENSION,
REMOVAL, OR PROHIBITION
(a) Grounds. The Board may suspend a bank
official from office or prohibit a bank official from
further participation in any manner in the conduct
of a bank’s affairs when the person is charged in
any information, indictment, or complaint author
ized by a United States attorney with the commis
sion of, or participation in, a crime involving dis
honesty or breach of trust that is punishable by im
prisonment for a term exceeding one year under
State or Federal law. The Board may remove a
bank official from office or prohibit a bank official
from further participation in any manner in the con
duct of a bank’s affairs when the person is con
victed of such an offense and the conviction is not
subject to further direct appellate review. The
Board may suspend or remove a bank official or
prohibit a bank official from participation in a
bank’s affairs in these circumstances if the Board
finds that continued service to the bank or partici
pation in its affairs by the bank official may pose a
threat to the interests of the bank's depositors or
may threaten to impair public confidence in the
bank.
(b) Contents. The Board commences a suspen
sion, removal, or prohibition action with the
issuance, and service upon a bank official, of a
notice of suspension from office, or order of re
moval from office, or notice or order of prohibition
from participation in the bank’s affairs. Such a
notice or order shall indicate the basis for the sus
SECTION 263.32—REQUEST FOR
INFORMAL HEARING
A bank official who is suspended or removed
from office or prohibited from participation in the
bank’s affairs may request an informal hearing. The
request shall be filed in writing with the Secretary,
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551. The request shall state
with particularity the relief desired and the grounds
therefor and shall include, when available, support
ing evidence. If the bank official desires to present
oral testimony or witnesses at the hearing, the bank
official must include a request to do so with the
request for informal hearing. The request to present
oral testimony or witnesses should specify the
names of the witnesses and the general nature of
their expected testimony.
SECTION 263.33—ORDER FOR
INFORMAL HEARING
(a) Issuance of hearing order. Upon receipt of
a timely request for an informal hearing, the Secret
ary will promptly issue an order directing an infor
mal hearing to commence within 30 days of the re
ceipt of the request. At the request of the bank offi
cial, the Secretary may order the hearing to com
mence at a time more than 30 days after the receipt
of the request for hearing. The hearing shall be
15
§§ 263.33— 263.34
RULES OF PRACTICE
(d) Authority of presiding officers. In the
course of or in connection with any proceeding
under this subpart, the Board or the presiding offi
cers are authorized to administer oaths and affirma
tions, to take or cause to be taken depositions, to
issue, revoke, quash, or modify subpenas and subpenas duces tecum, and, for the enforcement there
of, to apply to an appropriate United States district
court. All action relating to depositions and sub
penas shall be in accordance with the rules pro
vided in sections 263.7 and 263.8 of Subpart A of
these Rules.
(e) Recommendation of presiding officers. The
presiding officers shall make a recommendation to
the Board concerning the notice or order of suspen
sion, removal, or prohibition within 20 calendar
days following the close of the record on the
hearing.
held in Washington, D.C., or at such other place as
may be designated by the Secretary, before presi
ding officers designated by the Secretary to conduct
the hearing. The presiding officers normally will in
clude representatives from the Board’s Legal Divi
sion and Banking Supervision and Regulation Divi
sion and from the appropriate Federal Reserve
Bank.
(b) Waiver of oral hearing. A bank official
may waive in writing the official’s right to an oral
hearing and instead elect to have the matter deter
mined by the Board solely on the basis of written
submissions.
(c) Hearing procedures.
(i) The bank official may appear at the hearing
personally, through counsel, or personally with
counsel. The bank official shall have the right to
introduce relevant written materials and to present
an oral argument. The bank official may introduce
oral testimony and present witnesses only if ex
pressly authorized by the Board or the Secretary.
Neither the formal rules of evidence nor the adjudi
cative procedures of the Administrative Procedure
Act (5 U.S.C. §§ 554— 557) or Subpart A of these
Rules shall apply to the informal hearing ordered
under this subpart unless the Board orders that they
apply.
(ii) The proceedings shall be recorded and a
transcript shall be furnished to the bank official
upon request and after the payment of the cost
thereof. Witnesses need not be sworn, unless
specifically requested by a party or the presiding
officers. The presiding officers may ask questions
of any witness.
(iii) The presiding officers may order the rec
ord to be kept open for a reasonable period follow
ing the hearing (normally 5 business days), during
which time additional submissions to the record
may be made. Thereafter, the record shall be
closed.
SECTION 263.34— DECISION OF THE BOARD
(a) Within 60 calendar days following the close
of the record on the hearing, or receipt of written
submissions where a hearing has been waived, the
Board shall notify the bank official whether the
notice of suspension or prohibition will be con
tinued, terminated, or otherwise modified, or
whether the order of removal or prohibition will be
rescinded or otherwise modified. The notification
shall contain a statement of the basis for any
adverse decision by the Board. In the case of a de
cision favorable to the bank official, the Board
shall take prompt action to rescind or otherwise
modify the order of suspension, removal, or prohibi
tion.
(b) In deciding the question of suspension, re
moval, or prohibition under this subpart, the Board
will not rule on the question of the guilt or inno
cence of the individual with respect to the crime
with which the individual has been charged.
16
Federal Register / V ol. 44, No. 192 / Tu esday, O cto b e r 2, 1979 / Rules and R egulations
order may be issued whether or not a
notice o f assessment has been issued.
Subpart B also specifies the relevant
considerations that the Board will take
into account in determining the amount
o f the penalty. These considerations
include the gravity o f the violation, any
history o f previous violations, the
financial resources and good faith o f the
person or persons charged, the econom ic
benefit derived by the person or persons
from the violation, and such other
matters as justice may require. The
econ om ic benefit derived from the
violation is not a consideration that is
specified in the civil penalty statutes.
The Board, however, believes that the
econom ic benefit derived from the
violation should as a matter of justice be
considered in assessing a civil money
penalty, and, for this reason, has
identified this factor in the regulation.
In § 263.24 o f Subpart B, the Board has
authorized its General Counsel, in
appropriate cases, to advise the person
concerned that the assessment o f a civil
penalty is being considered and to
provide the person with an opportunity
to present written materials or to
request a conference with members o f
the Board’ s staff to show w hy the
penalty should not be assessed or, if
assessed, should be reduced in amount.
This informal procedure will precede the
issuance o f a formal notice o f
assessm ent and will afford the person
con cern ed an opportunity to contest the
assessm ent without the necessity (and
ensuing time and expense) o f a formal
hearing. The Board has incorporated this
procedure into its Rules in the belief that
the procedure, in many cases, may
provide a simple, efficient and fair
Drocedure to resolve controversies
regarding the appropriateness or amount
o f a proposed civil penalty.
Subpart C of the Rules of Practice for
Hearings governs informal hearings
ordered by the Board upon the request
of an officer, director or other person
participating in the conduct of the
affairs of a State member bank, whom
the Board has suspended or removed
from office, or prohibited from further
participation in any manner in the
conduct o f the bank’s affairs, pursuant
to 12 U.S.C. 1818(g). The Board may
suspend a person from office or prohibit
a person from further participation in
any manner in the conduct o f the affairs
o f a State member bank where the
person is charged with the com m ission
o f a crime involving dishonesty or
breach o f trust that is punishable by
imprisonment for a term exceeding one
year. If the person is con victed o f such
an offense and the conviction is not
subject to further appellate review, the
Board may rem ove the person from
office or prohibit the person from further
participation in any manner in the
conduct o f the bank’s affairs. The Board
may issue a notice o f suspension or
order o f rem oval only upon a finding
that the individual’ s continued service to
the bank or participation in its affairs
may pose a threat to the interests o f the
bank's depositors or may threaten to
impair public con fiden ce in the bank.
Under Subpart C, the Board must
serve the notice of suspension or order
of removal upon the officer, director or
other person, and upon the bank
concerned, whereupon the officer,
director or other person shall
immediately cease service to the bank
or further participation in the bank’s
affairs. An individual against whom a
notice of suspension or order of removal
has been issued has 30 days from
service of the notice or order to request
an informal hearing on the suspension
or removal. Upon receipt of a timely
request for hearing, the Board’s
Secretary will order an informal hearing
to be heid. normally before
representatives of the Board’s staff and
of the appropriate Federal Reserve
Bank. The hearing must be scheduled to
commence not more than 30 days from
receipt of the hearing reauest. The
purpose of the hearing is to afford the
person concerned an opportunity to
show that continued service to, or
participation in the affairs of. the bank
does not, and is not likely to. pose a
threat to the interests of the bank’s
depositors or threaten to impair public
confidence in the bank.
The director, officer, or other person
concerned may be represented by
counsel and may introduce relevant
written materials and present oral
argument at the hearing. The
presentation o f oral testimony and
w itnesses will be allow ed only if
expressly authorized by the Board or the
Board's Secretary. A request to present
witnesses at the hearing must be
included with the request for a hearing
and should specify the names o f the
witnesses and the general nature o f their
anticipated testimony. The presiding
officers at the hearing are required to
submit a recom m endation to the Board,
normally within 15 calendar days o f the
close o f the record on the hearing.
Within 60 days o f the close o f the record
on the hearing, the Board shall notify the
person concerned as to whether the
suspension, removal, or prohibition will
be continued, terminated, or otherwise
modified. The notification must contain
a statement o f the basis for the Board’s
decision, if adverse to the officer,
director, or other person concerned.
The provisions o f section 553 o f Title
5, United States Cede, relating to notice
and public participation and deferred
effective date are not follow ed in
connection with this amendment
because the changes involved therein
are procedural in nature and do not
constitute a substantive rule subject to
the requirements o f that section.
Effective September 24,1979; (1) The
title o f the Board’s Rules o f Practice for
Formal Hearings {12 CFR Part 263) is
revised to read "Part 263— Rules of
Practice for Hearings” , and (2) Part 263
is amended as follow s;
1. The title o f Subpart A is revised.
2. Sections 263.1, 263.2 and 263.3(b)
are revised.
3. Section 263.6(a) is revised ana a
new paragraph (h) is added.
4. Section 263.7 (c) and (d) and
§ 263.8(c) are revised.
5. Subparts B and C are revised.
•The Board is authorized to assess a civil penalty
for a violation of section 19 of the Federal Reserve
Act against ail member banks, national banks as
well as State member banks. (12 U.S.C. 505).
Federal Register / Vol. 44, No. 192 / Tuesday, O ctober 2, 1979 / Rules and Regulations
FEDERAL RESERVE SYSTEM
12 CFR Part 263
Rules of Practice for Hearings
a g e n c y : Board of Governors of the
Federal Reserve System.
a c t io n : Final rule.
The Board of Governors of
the Federal Reserve System has
amended its formerly entitled “ Rules of
Practice for Formal Hearings." 12 CFR
Part 263, to incorporate certain changes
in the Board’s hearing procedures. These
amendments were necessary because of
the expansion in the Board’ s supervisory
and enforcement authority made by
Titles I, VI. and VIII of the Financial
Institutions Regulatory and Interest Rate
Control Act of 1978 ("FIRA"), (Pub. L.
95-630).
The amendments establish procedures
to implement the Board’s new authority
to assess and collect civil money
penalties for violations of certain
provisions of law or the terms of a final
cease-and-desist order issued under the
Financial Institutions Supervisory Act of
1966. as amended. 12 U.S.C. 1818(b). The
amendments also establish procedures
governing informal hearings ordered by
the Board in connection with the
suspension or removal, under 12 U.S.C.
1818(g), of bank officials charged with or
convicted of a felony. The amendments
include in the Board's formal hearing
procedures the rules of 5 U.S.C. 556(d)
and 557 regarding ex parte
communications and make certain minor
and technical corrections to the Board’s
procedures for formal hearings.
e f f e c t iv e d a t e : September 24.1979.
summary:
FOR FURTHER INFORMATION CONTACT:
)ames V. Mattingly, }r., Assistant
General Counsel, Board of Governors of
the Federal Reserve System.
Washington, D.C. 20551 (202/452-3430).
SUPPLEMENTARY INFORMATION: The
Board’s “ Rules of Practice for Hearings."
formerly entitled "Rules o f Practice for
Formal Hearings," is divided into
Subparts A through C. Subpart A
prescribes the general rules o f practice
applicable to all formal administrative
hearings ordered by the Board. The
Board has eliminated from its Rules of
Practice the text of former Subparts B
and C, which merely repeated the text of
12 U.S.C. 1818(b), (c), and (e) regarding
cease and desist and removal
proceedings. Subparts B and C o f the
new Rules of Practice establish
procedures that relate, respectively, to
proceedings for the assessment and
collection of civil money penalties and
[Enc. Cir. No. 8693]
proceedings for the suspension or
removal from office of a bank official
charged with the commission or
convicted of a felony.
Section 263.1 of Subpart A has been
amended to incorporate reference to the
formal hearings required by Titles I, VI.
and VIII of FIRA to be held in
connection with: (1) The administrative
assessment o f a civil money penalty for
violation o f certain provisions o f law, (2)
The issuance o f a divestiture order
against a bank holding company under
12 U.S.C. 1844(e), or (3) The disapproval
of a change in control o f a State member
bank or a bank holding company under
12 U.S.C. 1817(j). The rules of practice
set forth in Subpart A shall govern all
these formal proceedings.
The Board has also incorporated into
§ 263.6 of Subpart A the rules o f section
4 of the Government in the Sunshine Act
(Pub. L. 94-409), codified at 5 U.S.C. 551.
556(d), and 557(d), regarding e x parte
communications in formal proceedings.
The Board has revised § 263.3(b) of
Subpart A to require that persons
participating in hearings ordered by the
Board conduct themselves in an orderly
fashion and to authorize the presiding
officer to exclude a person from a
hearing for improper conduct. The Board
has also amended § 263.7(c) o f Subpart
A to provide that, except as otherwise
required by law, service o f a subpena
may be accomplished by registered mail
(as authorized in several provisions of
FIRA) as well as by personal service.
Section 263-8(c) o f Subpart A has been
amended to clarify that evidence
objected to during the course of a
deposition shall be taken subject to the
objection.
Subpart B o f the Rules of Practice for
Hearings implements the Board’s
authority under sections 101.102,106,
107, and 801 o f FIRA to assess civil
money penalties. Under this authority,
the Board may assess a civil money
penalty against a State member bank
and/or the officers, directors,
employees, or agents o f the bank or
other persons participating in the
conduct o f its affairs for a violation of
the provisions of sections 19,122, or 23A
of the Federal Reserve Act. as amended,
or the provisions of Title VIII of FIRA
relating to preferential lending to
executive officers, directors, or principal
shareholders o f banks based upon a
correspondent account relationship (12
U.S.C. 1972(2)). The Board may assess a
civil penalty for violation of a final
cease and desist order issued under 12
U.S.C. 1818(b) or (c) against a bank
holding company, any subsidiary thereof
(except a bank), the other institutions
specified in 12 U.S.C 1818(b)(3).and (4)
over which the Board exercises
supervisory authority, and/or the
officers, directors, employees, agents of
the institution or other persons
participating in its affairs. The Board is
also authorized to assess a civil penalty
against a company that violates, or an
individual who participates in a
violation, of any provision of the Bank
Holding Company Act. or any regulation
or order issued thereunder.
The procedures o f Subpart A and B do
not apply to the assessment of a civil
money penalty for a violation of the
Change in Bank Control Act. 12 U.S.C.
1817(j). A civil money penalty for a
violation of that statute is assessed in
accordance with the procedures set
forth in 12 U.S.C. 1817(j){15). Under
those procedures, the person assessed is
not entitled to a formal hearing before
the Board with respect to the
assessment. The person assessed does,
however, have the right to submit data,
views and argument to the Board
regarding the assessment and to a trial
de novo on the assessment in an
appropriate United States district court.
The procedures spelled out in Subpart
B require the Board to provide the
person being assessed with a notice of
assessment of civil penalty. The notice
is required to state the amount of the
penalty, the legal authority under which
the civil penalty is being assessed, the
legal and factual grounds for the
assessment, and the period within which
the penalty is payable. The notice will
also inform the person being assessed of
the right to request a formal hearing on
the assessment and the time limits for
filing such a request.
A request for hearing on a notice of
assessment must be made within ten
days after issuance o f the notice. If the
person being assessed does not request
a hearing within this ten day period the
notice o f assessment becomes a final
and unappealable order. If a hearing is
requested within the ten day period, the
Board's Secretary will promptly issue an
order directing a formal administrative
hearing to commence within 30 days of
the date o f the order. If the grounds fcr
having assessed the penalty are
established on the record of that
hearing, the Board will issue an order of
assessment of civil penalty. The order
shall specify the amount of the penalty
that has been assessed and the date the
penalty is payable. An assessment order
may also be issued with the consent of
the person being assessed in much the
same manner as a cease and desist
order issued upon consent under 12
U.S.C. 1818(b). A consent assessment
CONTENTS
Rules of the B oard of Governors of the F ederal Reserve System
Rules Regarding Availability of Information
Rules Regarding Access to and Review of Personal Information in
Systems of Records
Rules Regarding Public Observation of Meetings
Rules Regarding Delegation of Authority
Rules of Organization
Rules of Procedure
Rules of Practice for Hearings
Regulations of the Board of Governors of the F ederal Reserve System
Extensions of Credit by Federal Reserve B an k s...............................................
Equal Credit O pportunity........................................................................................
Home Mortgage D isclosure......................................................................................
Reserves of Member B an ks......................................................................................
Electronic Fund T ransfers........................................................................................
Securities of Member State Banks .......................................................................
Securities Credit Transactions—
Rules Governing Borrowers Who Obtain Securities C r e d it.................
Securities Credit by Persons Other Than Banks, Brokers, or Dealers
Credit by Brokers and Dealers......................................................................
Credit by Banks for the Purpose of Purchasing
or Carrying Margin S to ck s.........................................................................
Membership of State Banking Institutions in the Federal Reserve System
Issue and Cancellation of Capital Stock of Federal Reserve B a n k s...........
Collection of Checks and Other Items and Transfers of F u n d s...................
International Banking Operations...........................................................................
Management Official Interlocks...............................................................................
Relations with Foreign Banks and B a n k e r s.......................................................
Loans to Executive Officers, Directors, and Principal Shareholders
of Member B a n k s..............................................................................................
Minimum Security Devices and Procedures for Federal Reserve Banks
and State Member B a n k s...............................................................................
Interest on D eposits....................................................................................................
Relationships with Dealers in Securities Under Section 32 of the
Banking Act of 1933........................................................................................
Reimbursement to Financial Institutions for Assembling
or Providing Financial R ecords....................................................................
Loan Guarantees for Defense Production ............................................................
Bank Holding Companies and Change in Bank C on trol................................
Truth in Lending.........................................................................................................
Unfair or Deceptive Acts or Practices..................................................................
Community Reinvestment..........................................................................................
A
B
C
D
E
F
X
G
T
U
H
I
J
K
L
N
0
P
Q
R
S
V
Y
Z
AA
BB
Rules of O rganization and Procedure of the Consumer Advisory Council
@FedFRASER