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FDIC Enforcement Decisions and Orders

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{{4-1-90 p.A-1487}}
   [5139] Docket No. FDIC 88-159e (8-1-89).

   FDIC dismissed proceedings against Respondent, a former bank director who had resigned his position the day before being served with a Notice of Removal. FDIC dismissed the proceedings because the United States Court of Appeals held in an unrelated case that Section 8(e) of the Federal Deposit Insurance Act does not authorize the removal of a director who resigns before being served with Notice of Removal proceedings. (Related proceedings in this docket appear at [¶8005].)

   [.1] Practice and Procedure—Interlocutory Appeals—New Law
   Grant of special permission to appeal is appropriate when the United States Court of Appeals establishes new law relevant to the proceeding.

   [.2] Prohibition, Removal, or Suspension—Defenses—Resignation Before Notice
   FDIC may not seek a removal or prohibition order against a former bank director who resigns his position before being served with a Notice of Removal or Prohibition.

In the Matter of
* * * Individually, and as former
president, director, and a participant in the
conduct of the affairs of * * * BANK


(Insured State Nonmember Bank)
DECISION AND ORDER DISMISSING
PROCEEDING

   On January 10, 1989, the Board of Directors ("Board") of the Federal Deposit Insurance Corporation ("FDIC") denied Respondent's request for special permission to appeal an order of the administrative law judge denying his motion to dismiss the above captioned proceeding. Respondent argued that the FDIC lacked jurisdiction to issue an order to prohibit his future participation in the affairs of * * * Bank and other federally insured financial institutions because he resigned his position at * * * Bank prior to the issuance of the notice that the agency intends to seek his removal.
   On April 11, 1989, Respondent filed for consideration by the administrative law judge a Motion for Reconsideration of the administrative law judge's September 13, 1988, denial of Respondent's Motion to Dismiss for Lack of Subject Matter Jurisdiction. The administrative law judge referred Respondent's Motion for Reconsideration to the Board for a determination.
{{4-1-90 p.A-1488}}The motion for reconsideration is based on the March 3, 1989, decision of the United States Court of Appeals for the District of Columbia Circuit in Stoddard v. Board of Governors of the Federal Reserve System, 868 F.2d 1308 (D.C. Cir. 1989). In Stoddard, the D.C. Circuit held that the statutory language the FDIC was relying upon in this enforcement proceeding, section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e), does not authorize the issuance of a removal or prohibition order against a bank officer or director who resigns his position before he is served with the notice that the agency intends to seek his removal. The Compliance and Enforcement Section of the FDIC's Legal Division opposes reconsideration.
   The Board denied Respondent's earlier interlocutory appeal from the decision of the administrative law judge denying his motion to dismiss after concluding that Respondent had failed to meet the requirements of section 308.12(e) of the FDIC Rules and Regulations, 12 C.F.R. §308.12(e). Interlocutory appeals are not authorized without special permission of the Board.

   [.1] The Board now agrees with Respondent that interlocutory review is appropriate. The Stoddard decision establishes new law limiting the Board's jurisdiction under section 8(e) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e).
   [.2] Although the Board and the Comptroller of the Currency, which operates under the same provision as to National bank officers and directors, had consistently held that the resignation of a bank officer or director prior to the issuance of a section 8(e) notice does not affect the agency's authority to issue an order of prohibition, the D.C. Circuit has ruled otherwise.
   To be consistent with the law of this circuit, the Board must dismiss this proceeding. The proceeding is dismissed without prejudice so that a new proceeding may be instituted to determine whether Mr. * * * should be prohibited from participation in the conduct of the affairs of federally insured financial institutions in the event the Federal Deposit Insurance Act is amended to authorize such orders against individuals who resign prior to the issuance of notices. Similarly, this decision and order does not bar an action under section 8(e)(2) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(2), in the event that Mr. * * * becomes an officer or director of another bank.
   THEREFORE, IT IS ORDERED, that Respondent's request for reconsideration is GRANTED;
   IT IS FURTHER ORDERED, that this proceeding is DISMISSED WITHOUT PREJUDICE.
   By direction of the Board of Directors.
   Dated at Washington, D.C., this 1st day of August, 1989.

In the Matter of
* * * Individually, and as former
president, director, and a participant in the
conduct of the affairs of * * * BANK
(Insured State Nonmember Bank)
ORDER REFERRING RESPONDENT'S
MOTION TO THE BOARD

ORDER

   On April 11, 1989, Counsel for Respondent filed, apparently for my consideration, a Motion for Reconsideration of my Order Denying Respondent's Motion to Dismiss for Lack of Subject Matter Jurisdiction; Counsel for the FDIC filed, with the Office of the Executive Secretary, a Memorandum of Points and Authorities in Opposition thereto on May 3, 1989, serving a copy upon the undersigned.
   Having duly considered the matter, and having concluded that:
   1. There appears to be some confusion as to whether this Motion and Opposition are intended for my consideration;
   2. The issue of acquiescence in the Decisions of a particular Court of Appeals involves matter of policy best determined by the Board of the Federal Deposit Insurance Corporation;
   3. The Administrative Law Judge is without authority to grant a motion to dismiss the proceedings, pursuant to Section 308.07(b)(9) of the pertinent Regulations; and,
   4. A prompt decision by the Board being essential to the proper conduct of this proceeding,
   It is ORDERED, pursuant to Section 308.12(d) of the Regulations, that Respondent's Motion for Reconsideration be, and it hereby is, referred to the Board for determination.
   Dated: May 9, 1989

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