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[¶12,167] In the Matter of The Chinese American Bank, New York, New York,
Docket No. 03-218b (3-16-04).
A cease and desist order was issued, based on findings by the FDIC that
it had reason to believe that respondent was engaged in unsafe and
unsound practices.
[.1] Regulation OCompliance Required
[.2] Regulation OWritten Policy Required
[.3] Compliance CommitteeEstablishment Required
[.4] ShareholdersDisclosure of Cease and Desist Order Required
In the Matter of
THE CHINESE AMERICAN BANK
NEW YORK, NEW YORK
(Insured State Nonmember Bank)
ORDER TO CEASE AND DESIST
FDIC-03-218b
THE CHINESE AMERICAN BANK, New York, New York, ("Insured
Institution"), having been advised of its right to a Notice of
Charges and of Hearing detailing the unsafe or unsound banking
practices and violations of law and/or regulations alleged to have been
committed by the Insured Institution and of its right to a hearing on
the alleged charges under section 8(b)(1) of the Federal Deposit
Insurance Act ("Act"), 12 U.S.C. § 1818(b)(1), and having
waived those rights, entered into a STIPULATION AND CONSENT TO THE
ISSUANCE OF AN ORDER TO CEASE AND DESIST ("CONSENT AGREEMENT")
with counsel for the Federal Deposit Insurance Corporation
("FDIC"), dated March 16, 2004, whereby solely for the purpose of
this proceeding and without admitting or denying the alleged charges of
unsafe or unsound banking practices, the Insured Institution consented
to the issuance of an ORDER TO CEASE AND DESIST ("ORDER") by the
FDIC.
The FDIC considered the matter and determined that it had reason to
believe that the Insured Institution had engaged in unsafe or unsound
banking practices and had committed violations of law and/or
regulations. The FDIC, therefore, accepted the CONSENT AGREEMENT and
issued the following:
ORDER TO CEASE AND DESIST
IT IS HEREBY ORDERED that the Insured Institution, its directors,
officers, employees, agents, and other institution-affiliated parties
(as that term is defined in Section 3(u) of the Act, 12 U.S.C.
§ 1813(u)), and its successors and assigns cease and desist from the
following unsafe or unsound banking practices and violations:
(a) Operating in violation of section 22(h) of the Federal Reserve
Act, as amended, 12 U.S.C. § 375b, and section 215.4(c) of Regulation
O ("Regulation O") of the Board of Governors of the Federal
Reserve System, 12 C.F.R. § 215.4(c), made applicable to state
nonmember banks by section 18(j)(2) of the Act, 12 U.S.C.
§ 1828(j)(2); and section 337.3 of the FDIC's Rules and Regulations,
12 C.F.R. § 337.3;
(b) Operating in violation of section 23A of the Federal Reserve Act,
as amended, 12 U.S.C. § 371c, made applicable to state
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nonmember banks by section 18(j)(1) of the Act, 12 U.S.C. § 1828(j)(1);
(c) Operating in violation of the State of New York legal lending limit
restrictions as set forth in New York Banking Law Section 103; and
(d) Operating with a board of directors which has failed to provide
adequate supervision over and direction to the active management of the
Insured Institution.
IT IS FURTHER ORDERED that the Insured Institution, its
institution-affiliated parties, and its successors and assigns, take
affirmative action as follows:
[.1] (a) Within ten (10 days from the effective date of this ORDER, the
Insured Institution shall develop and submit a plan ("Plan")
acceptable to the Regional Director of the FDIC New York Regional
Office ("Regional Director") to correct any violations of
Regulation O and section 23A of the Federal Reserve Act, and the
lending limits imposed by the laws of the State of New York, New York
Banking Law Section 103 (the "State Lending Limits").
(b) The Insured Institution shall not engage or participate, directly
or indirectly, in any violations of Regulation O and sections 23A and
23B of the Federal Reserve Act, and the State Lending Limits.
(c) The Insured Institution shall submit evidence of the actions taken
to comply with the Plan submitted pursuant to Paragraph 1(a) of this
ORDER to the Regional Director within ten (10) days of taking each
action.
[.2] (a) Within thirty (30) days from the effective date of this ORDER, the
Insured Institution shall develop and submit to the Regional Director
for review and comment a written policy ("Policy") to ensure that
the Insured Institution does not engage in transactions or payment of
funds which may violate Regulation O, 12 C.F.R. Part 215, and sections
23A and 23B of the Federal Reserve Act, 12 U.S.C. §§ 371c and
371c-1. Among other things, the Policy shall limit the payment of any
management, consulting, or other fees or funds of any nature, directly
or indirectly, to or for the benefit of CAB Holding, LLC, Wilmington,
Delaware, a registered bank holding company and the Insured
Institution's holding company, to only those fees or funds paid in
connection with services performed by CAB Holding, LLC on behalf of or
for the benefit of the Insured Institution.
(b) Upon receipt and consideration of the Regional Director's
comments on the Policy submitted and reviewed pursuant to Paragraph
2(a) of this ORDER, the Insured Institution shall adopt and implement
the Policy within ten (10) business days of approval and note such in
the minutes of the board of directors.
[.3] Within thirty (30) days from the effective date of this ORDER, the
board of directors shall establish a committee comprised of board
members (the "Board Compliance Committee") with the
responsibility to ensure that the Insured Institution complies with the
provisions of this ORDER. At least two-thirds of the members of the
Board Compliance Committee shall be independent, outside directors. The
Board Compliance Committee shall report monthly in writing to the
entire board of directors, and a copy of each monthly report and any
discussion relating to such report or to this ORDER shall be included
in the minutes of the board of directors. Nothing contained herein
shall diminish the responsibility of the entire board of directors to
ensure compliance with the provisions of this ORDER.
[.4] Following the effective date of this ORDER, the Insured Institution
shall send to its sole shareholder, CAB Holding, LLC, or otherwise
furnish a description of this ORDER in conjunction with the Insured
Institution's next shareholder communication. The description shall
fully describe the ORDER in all material respects.
5. Notwithstanding any provision of this ORDER to the
contrary, the Regional Director may, in his sole discretion, grant
written extensions of time to the Insured Institution to comply with
any provision of this ORDER.
6. The provisions of this ORDER shall not bar, estop or otherwise
prevent the FDIC, or any other federal or state agency or department
from taking any other action affecting the Insured Institution or any
of its current or former institution-affiliated parties.
7. The provisions of this ORDER shall be binding upon the Insured
Institution, its directors, officers, employees, agents, successors,
assigns, and other institution-affiliated parties of the Insured
Institution.
8. This ORDER shall become effective upon the date of its issuance as
set forth below.
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9. The provisions of this ORDER shall remain effective and enforceable
except to the extent that, and until such time as, any provisions of
this ORDER shall have been modified, terminated, suspended, or set
aside by the FDIC.
Pursuant to delegated authority.
Dated: March 16, 2004.