Enforcement Actions

HRS div. 2, tit. 22, ch. 412, art. 2, pt. III

in effect

HRS §412:2-300 Enforcement actions

412:2-300. Enforcement actions In enforcing the provisions of this chapter, the commissioner is authorized to use the powers in this part without limitation to direct the discontinuance of any violation of law, or any unsafe or unsound practice that is likely to cause insolvency or substantial dissipation of assets or earnings of the institution. The provisions of this chapter may be enforced by informal or formal actions. Informal actions include board resolutions, letter agreements, records of action, memoranda of understanding, or supervisory agreements. Formal actions include cease and desist orders (whether temporary or permanent), removal orders, suspension and revocation orders, divestiture orders, and orders enforcing statutory provisions. Any person who is the subject of formal or informal enforcement action by the commissioner may consent to the entry of any formal order. [L 1993, c 350, pt of §1; am L 1998, c 196, §2]

HRS §412:2-301 Joint enforcement with federal regulatory agency

412:2-301. Joint enforcement with federal regulatory agency The commissioner may enter into any agreement and take any action with the appropriate federal regulatory agency to enforce jointly all federal and state laws applicable to the Hawaii financial institution. L 1993, c 350, pt of §1

HRS §412:2-302 Cease and desist orders; grounds for issuance

412:2-302. Cease and desist orders; grounds for issuance (a) Whenever it appears to the commissioner that any person has engaged or is about to engage in any act or practice constituting a violation of any: (1) Provision of this chapter; (2) Rule adopted or order issued under this chapter; or (3) Condition of an approval of request or application by the commissioner or a written agreement between such person and the commissioner, the commissioner may, in the commissioner's discretion, issue a temporary or permanent cease and desist order to enforce compliance with this chapter, with any rule adopted or order issued under this chapter, or with the conditions of such approval or written agreement. The commissioner shall have the discretion to include in the order an assessment of an administrative penalty against any person who violates this chapter or who has knowingly violated a written agreement with, or a rule or order of, the commissioner made pursuant to this chapter. (b) The commissioner may issue a temporary or permanent cease and desist order to any Hawaii financial institution, any institution-affiliated party, or any other person that the commissioner finds or has reasonable cause to believe: (1) Is violating, has violated, or is about to violate this chapter or any rules adopted pursuant to this chapter; (2) Is violating, has violated, or is about to violate any written condition imposed or order issued by the commissioner on such financial institution's or other person's authority to engage in business, or any condition of a written agreement between the financial institution or other person and the commissioner; (3) Is engaging, has engaged, or is about to engage in an illegal, unauthorized, unsafe, or unsound practice; or (4) Is failing to maintain books and records that are sufficiently complete and accurate so as to permit the commissioner to determine the financial condition of the institution named in the order. [L 1993, c 350, pt of §1; am L 1998, c 196, §3]

HRS §412:2-303 Permanent cease and desist orders; procedure; hearing; enforcement

412:2-303. Permanent cease and desist orders; procedure; hearing; enforcement (a) The notice of charges and proposed permanent cease and desist order shall be in writing and shall be served upon the institution-affiliated party or the Hawaii financial institution at its principal office in this State and upon any other affected party wherever that person can be located and served by the commissioner. The notice of charges shall state the alleged violations or wrongful practices and a summary of the facts in support of such allegations. The notice shall be accompanied by a proposed order which states the commissioner's intent to require discontinuance of such violation or practice and the immediate compliance with all requirements of any applicable agreement, conditions of approval, order, or law. The proposed order may also direct such affirmative action as may be necessary to prevent insolvency or to correct the alleged violation or wrongful practice. The notice of charges shall set forth a time and place for a hearing to determine whether the proposed order shall be issued. (b) Within twenty days after service of a notice of charges, unless an earlier date or later date is set by the commissioner upon request of the affected party, the commissioner shall hold a hearing in accordance with chapter 91. If no appearance is made at the scheduled hearing by the party or its duly authorized representative, the party shall be deemed to have consented to the issuance of the cease and desist order and the commissioner may issue a permanent cease and desist order. Any cease and desist order issued after a hearing held in accordance with this subsection shall become effective after service upon the affected party and shall remain effective until modified or terminated by the commissioner. Any appeal of a permanent cease and desist order shall be made to the circuit court in accordance with chapter 91. (c) On or after the effective date of any permanent cease and desist order, the commissioner may apply for enforcement of the order to the circuit court. Such application may also contain a petition for such other relief or remedies as may be appropriate in the circumstances. The application shall be given precedence over other cases pending in court, and shall in every way be expedited. [L 1993, c 350, pt of §1; am L 1998, c 196, §4]

HRS §412:2-304 Temporary cease and desist orders; effective date; hearing; enforcement

412:2-304. Temporary cease and desist orders; effective date; hearing; enforcement (a) To act with the utmost speed, the commissioner may issue a temporary cease and desist order upon a determination that one or more of the grounds specified in section 412:2-302 are present; provided that, in the case of a Hawaii financial institution or an institution-affiliated party, the commissioner shall not issue a temporary cease and desist order unless the commissioner has also made a determination that the violation, threatened violation, or unsafe or unsound practice is likely to: (1) Cause insolvency or substantial dissipation of assets; or (2) Seriously weaken the condition of the institution; or (3) Otherwise seriously prejudice the interests of the depositors during the period in which a permanent cease and desist order can be obtained. The order shall be accompanied by a notice of charges stating the alleged violation or wrongful practice, a summary of the facts in support of the allegation, and a time and place for a hearing to determine whether the temporary order shall be made permanent. The order may require discontinuance of a violation or practice; require the immediate compliance with all requirements of any applicable agreement, conditions of approval, order, or law; and direct affirmative action as may be necessary to prevent insolvency or to correct the alleged violation or wrongful practice. (b) The order shall be effective upon service on the affected party. The order shall remain in effect until a permanent cease and desist order is issued after a hearing, a permanent cease and desist order is consented to, or the charges are dismissed upon completion of a hearing. Any affected party contesting the issuance of the temporary cease and desist order may do so by applying to the circuit court for an injunction. (c) Within ten days after service of a notice of charges, unless an earlier date or later date is set by the commissioner upon request of the affected party, the commissioner shall hold a hearing in accordance with chapter 91. If no appearance is made at the scheduled hearing by the party or its duly authorized representative, the party shall be deemed to have consented to the issuance of the cease and desist order and the commissioner may convert the temporary cease and desist order into a permanent cease and desist order. Any permanent cease and desist order issued after a hearing held in accordance with this subsection shall become effective after service upon the affected party and shall remain effective until modified or terminated by the commissioner. Any appeal of a permanent cease and desist order shall be made to the circuit court in accordance with chapter 91. (d) Any temporary cease and desist order may be enforced in the circuit court upon application by the commissioner. Any permanent cease and desist order issued in accordance with this section may be enforced as provided in section 412:2-303(c). [L 1993, c 350, pt of §1; am L 1998, c 196, §5]

HRS §412:2-305 Consent cease and desist orders

412:2-305. Consent cease and desist orders Any affected party may waive its rights to a hearing on any notice of charges by stipulating and consenting to: (1) The issuance of a permanent cease and desist order; or (2) The conversion of a temporary cease and desist order into a permanent cease and desist order. Any cease and desist order issued by consent shall be effective as of the date specified therein and shall remain effective until modified or terminated by the commissioner. [L 1993, c 350, pt of §1; am L 1998, c 196, §6]

HRS §412:2-306 Removal or prohibition of institution-affiliated party; grounds

412:2-306. Removal or prohibition of institution-affiliated party; grounds (a) The commissioner may order the removal of any institution-affiliated party from office or employment with a Hawaii financial institution and the prohibition of the party's affiliation or participation in the affairs of the financial institution or any other Hawaii financial institution if the commissioner determines that all three of the following circumstances exist: (1) The institution-affiliated party has violated this chapter or any rules adopted pursuant to this chapter, violated a cease and desist order that has become effective, engaged or participated in an unsafe or unsound practice in connection with the financial institution, or breached a fiduciary duty owed to the financial institution; (2) By reason of such violation, practice, or breach the financial institution has suffered or will probably suffer financial loss or other damage, the interests of the financial institution's depositors have been or may be prejudiced, or the institution-affiliated party has received financial gain or other benefit as a result of the violation, practice, or breach; and (3) The violation, practice, or breach involves the institution-affiliated party's personal dishonesty or demonstrates the party's wilful or continuing disregard for the safety or soundness of the financial institution. (b) The commissioner may also order the removal of any institution-affiliated party from office or employment with a Hawaii financial institution and the prohibition of the party's affiliation or participation in the affairs of the financial institution or any other Hawaii financial institution if the commissioner determines that: (1) The institution-affiliated party has been charged in any information, indictment, or complaint authorized by a United States attorney, state attorney general, or similar legal officer, with the commission of, or participation in, a crime involving dishonesty or breach of trust that is punishable by imprisonment for a term exceeding one year under state or federal law; and (2) The continued service by the institution-affiliated party may pose a threat to the interests of the financial institution's depositors or may threaten to impair public confidence in the institution. [L 1993, c 350, pt of §1; am L 2001, c 170, §3; am L 2006, c 228, §7; am L 2008, c 196, §2]

HRS §412:2-308 Order of immediate suspension; procedure; effective date; hearing; enforcement

412:2-308. Order of immediate suspension; procedure; effective date; hearing; enforcement (a) In order to act with the utmost speed, the commissioner may issue an order immediately suspending an institution-affiliated party upon a determination that: (1) The grounds specified in section 412:2-306 are present; and (2) The protection of depositors or the financial institution warrants the immediate suspension and prohibition of the institution-affiliated party from further participation in the conduct of the affairs of the financial institution or any other Hawaii financial institution. The order shall be accompanied by a notice of charges that states the alleged violation, wrongful practice, or breach, and a summary of the facts in support of the allegation. The notice of charges shall set forth a time and place for a hearing to determine whether the temporary order shall be converted to a permanent removal or prohibition order. Any order of immediate suspension issued to an institution-affiliated party shall also be served upon the affiliated Hawaii financial institution. (b) The order shall be effective upon service on the institution-affiliated party. The order shall remain in effect until a permanent removal or prohibition order is issued after a hearing, a permanent removal or prohibition order is consented to, or the charges are dismissed upon completion of a hearing. Any institution-affiliated party contesting the issuance of the suspension order may do so by applying to the circuit court for an injunction. (c) Within ten days after service of a notice of charges, unless an earlier date or later date is set by the commissioner upon request of the affected party, the commissioner shall hold a hearing in accordance with chapter 91. If no appearance is made at the scheduled hearing by the party or the party's authorized representative, the party shall be deemed to have consented to the issuance of the suspension order and the commissioner may convert the suspension order into a permanent removal or prohibition order. Any permanent removal or prohibition order issued after a hearing held in accordance with this subsection shall become effective after service upon the institution-affiliated party and shall remain effective until modified or terminated by the commissioner. Any appeal of a permanent removal or prohibition order shall be made to the circuit court in accordance with chapter 91. (d) Any order of immediate suspension may be enforced in the circuit court upon application by the commissioner. Any permanent order of removal or prohibition issued in accordance with this section may be enforced as provided for in section 412:2-307(c). [L 1993, c 350, pt of §1; am L 2006, c 228, §9]

HRS §412:2-309 Consent order of removal or prohibition

412:2-309. Consent order of removal or prohibition Any institution-affiliated party may waive its rights to a hearing on any notice of charges by stipulating and consenting to the issuance of a permanent removal or prohibition order or by stipulating and consenting to the conversion of a temporary suspension order into a permanent removal or prohibition order. Any permanent removal or prohibition order issued by consent shall be effective as of the date specified therein and shall remain effective until modified or terminated by the commissioner. [L 1993, c 350, pt of §1; am L 1994, c 107, §1; am L 1995, c 52, §1]

HRS §412:2-310 Removal, prohibition, or suspension; effect of order

412:2-310. Removal, prohibition, or suspension; effect of order No institution-affiliated party whose removal, prohibition, or suspension has been ordered shall thereafter participate in any manner in the conduct of the affairs of the affiliated Hawaii financial institution or any other Hawaii financial institution as long as the order is in effect. Any violation of the order shall constitute a violation of law, and shall constitute sufficient grounds for the issuance of a cease and desist order to the affiliated financial institution. [L 1993, c 350, pt of §1; am L 2006, c 228, §10]

HRS §412:2-311 Suspension or revocation of charter or license

412:2-311. Suspension or revocation of charter or license (a) The commissioner may revoke or suspend any charter or license issued hereunder if the commissioner finds that: (1) Any information or representations submitted by an applicant in connection with the issuance of the charter or license were materially false when made; (2) Grounds exist for the appointment of a conservator or receiver under this article; (3) The Hawaii financial institution, for a period of six months or more, has ceased to engage in the business for which its charter or license was granted; or (4) The Hawaii financial institution has violated or is violating state or federal laws, rules, or regulations, or has committed or is committing an unsafe or unsound practice. (b) In issuing a suspension or revocation order, whether by consent or as a result of a chapter 91 hearing, the commissioner may impose such terms and conditions as the commissioner deems appropriate to protect the public interest. The order of suspension or revocation may require the Hawaii financial institution to cease engaging in business altogether, to close one or more of its places of business, or to cease engaging in a particular type of business, as the commissioner deems appropriate. (c) No suspension or revocation of any charter or license shall impair or affect the obligation of any preexisting lawful contract between a Hawaii financial institution and the other party or parties. Neither shall the suspension or revocation of a charter or license affect the institution's administrative, regulatory, civil or criminal liability for any act or condition existing prior to the suspension or revocation. (d) The commissioner shall have discretion to reinstate any suspended charter or license, or issue a new charter or license to a Hawaii financial institution whose charter or license has been revoked, if the grounds for ordering the suspension or revocation are no longer present. [L 1993, c 350, pt of §1; am L 1994, c 107, §2; am L 2001, c 170, §4]

HRS §412:2-312 Suspension or revocation; procedure; hearing; enforcement

412:2-312. Suspension or revocation; procedure; hearing; enforcement (a) The notice of charges and the proposed order of suspension or revocation shall be in writing and served upon the Hawaii financial institution at its principal office in this State. The notice of charges shall state the alleged grounds and a summary of the facts upon which such allegations are based. The notice shall be accompanied by a proposed order stating the commissioner's intention to suspend or revoke the institution's charter or license. The notice of charges shall set forth a time and place for a hearing to determine whether the suspension or revocation order shall be issued. (b) Within twenty days after service, unless an earlier or later date is set by the commissioner upon request of the affected institution, the commissioner shall hold a hearing in accordance with chapter 91. If no appearance is made at the scheduled hearing by the party or the party's authorized representative, the party shall be deemed to have consented to [the] issuance of the suspension or revocation order and the commissioner may issue an order of suspension or revocation. Any suspension or revocation order issued after a hearing held in accordance with this subsection shall become effective after service upon the affected institution and shall remain effective until modified or terminated by the commissioner. Any appeal of a suspension or revocation order shall be made to the circuit court in accordance with chapter 91. (c) On or after the effective date of any suspension or revocation order, the commissioner may apply for enforcement of the order to the circuit court. [L 1993, c 350, pt of §1]

HRS §412:2-313 Consent suspension and revocation order

412:2-313. Consent suspension and revocation order Any Hawaii financial institution may waive its right to a hearing on any notice of charges by stipulating and consenting to the issuance of an order suspending or revoking a license or charter. Any final suspension or revocation order issued by consent shall be effective as of the date specified therein and shall remain effective until modified or terminated by the commissioner. [L 1993, c 350, pt of §1]

HRS §412:2-314 Action to correct capital and surplus impairment

412:2-314. Action to correct capital and surplus impairment (a) Whenever it appears to the commissioner that the capital and surplus of a Hawaii financial institution is impaired, the commissioner shall notify the financial institution in writing to correct the impairment within a reasonable time specified by the commissioner, which time may be extended by the commissioner. (b) If the Hawaii financial institution fails to correct the impairment of its capital and surplus as required, the commissioner may immediately appoint a conservator, or may close the financial institution, appoint a receiver to take possession of its assets, and proceed with the liquidation of its assets. A financial institution placed in conservatorship pursuant to this subsection may, with the consent of the commissioner, later resume business upon the conditions as the commissioner may approve. [L 1993, c 350, pt of §1; am L 1994, c 107, §3]

HRS §412:2-315 National or state emergencies

412:2-315. National or state emergencies (a) The emergency powers granted in this section may be invoked for the purpose of protecting the general public during any national or state emergency by assuring that Hawaii financial institutions subject to regulation by the commissioner can operate in a safe and effective manner. (b) If the President of the United States declares a national emergency, by proclamation or otherwise, the commissioner may order some or all Hawaii financial institutions in the State to comply with any regulations, limitations or restrictions prescribed by the Secretary of the Treasury, the Comptroller of the Currency, the Federal Reserve Board, or other federal agency that would otherwise be applicable only to a federal financial institution. (c) If the governor declares a state emergency, by proclamation or otherwise, the commissioner may order some or all Hawaii financial institutions in the State to observe such temporary rules, limitations or restrictions as the commissioner may prescribe in order to cope with such emergency. (d) The commissioner may assess and collect from all affected Hawaii financial institutions their ratable share of the administrative costs incurred by the division in its administration of any emergency orders issued under this section. Administrative costs assessed under this section shall be deposited into the compliance resolution fund established under section 26-9(o). The determination of the commissioner of which Hawaii financial institution or institutions are "affected" and the proration method the commissioner chooses to employ in making assessments under this section may be appealed to the circuit court as provided in chapter 91 by any Hawaii financial institution aggrieved thereby. [L 1993, c 350, pt of §1; am L 1996, c 207, §3; am L 1999, c 129, §9]

Source: Hawaii State Legislature (capitol.hawaii.gov), via Internet Archive capturesURL: https://www.capitol.hawaii.gov/hrscurrent/Vol08_Ch0401-0429/HRS0412/HRS_0412-.htmFetched: 11/10/2026