361.260. Violations, director to serve written notice of charges--hearing, temporary orders, when--orders set aside, procedure--penalty. - Missouri Statutes

Violations, director to serve written notice of charges--hearing,temporary orders, when--orders set aside, procedure--penalty.

361.260. 1. Whenever the director shall have reason tobelieve that the capital stock of any corporation subject to theprovisions of this chapter is reduced by impairment or otherwise,below the amount required by law, or by its certificates orarticles of agreement, he shall issue a notice of charges inrespect thereof.

2. Whenever it shall appear to the director, from anyexamination made by him or his examiners, that any corporationsubject to the provisions of this chapter, or any director,officer, employee, agent, or other person participating in theconduct of the affairs of such corporation, or any foreigncorporation licensed by the director to do business under thischapter or chapter 362, RSMo, is engaging in or has engaged in,or there is reasonable cause to believe that the corporation orany director, officer, employee, agent, or other personparticipating in the conduct of the affairs of such corporationis about to engage in, an unsafe or unsound practice inconducting the business of such corporation or is violating orhas violated, or there is reasonable cause to believe that thecorporation or any director, officer, employee, agent, or otherperson participating in the conduct of the affairs of suchcorporation is about to violate a law, rule, condition imposed,in writing, by the director in connection with the granting ofany application or other request by the corporation or anywritten agreement entered into with the director, or thecorporation's charter, the director may issue and serve upon thecorporation or such director, officer, employee, agent, or otherperson a notice of charges in respect thereof.

3. Whenever it shall appear to the director that anycorporation subject to the provisions of this chapter does notkeep its books and accounts in such manner as to enable himreadily to ascertain its true condition or that wrong entries orunlawful uses of the funds of the corporation have been made, thedirector may issue and serve upon the corporation or anyappropriate director, officer, employee, agent, or other person anotice of charges in respect thereof.

4. The notice of charges shall contain a statement of thefacts constituting the deficiencies, the alleged violation orviolations, improper use of funds, or the unsafe or unsoundpractice or practices, and shall fix a time and place at which ahearing will be held to determine whether an order to cease anddesist therefrom should issue against the corporation or thedirector, officer, employee, agent, or other person participatingin the conduct of the affairs of such corporation.

5. In the event the party or parties so served shall fail toappear at the hearing, or shall consent to the cease and desistorder, or in the event the director shall find that the fact ofany deficiency, violation, unsafe or unsound practice, inadequaterecordkeeping, or improper use of funds specified has beenestablished, the director may issue and serve upon thecorporation or the director, officer, employee, agent, or otherperson participating in the conduct of the affairs of thecorporation an order to cease and desist from the actions,violations, or practices charged. The order may require thecorporation or its directors, officers, employees, agents, andother persons participating in the conduct of the affairs of suchcorporation to cease and desist from same and, further, to takeaffirmative action to correct the conditions resulting from anysuch actions, violations, or practices. If the directordetermines that the capital of the corporation is impaired, theorder shall require that the corporation make good the deficiencyforthwith or within a time specified in the order. If thedirector determines that the corporation does not keep adequaterecords, the order may determine and prescribe such books ofaccount as the director, in his discretion, shall require of thecorporation for the purpose of keeping accurate and convenientrecords of the transactions and accounts. If the director shalldetermine that wrong entries or unlawful uses of the funds of thecorporation have been made, he shall order that the entries shallbe corrected, and the sums unlawfully paid out restored by theperson or persons responsible for the wrongful or illegal paymentthereof.

6. If a notice of charges served under this sectionspecifies, on the basis of particular facts and circumstances,that a corporation's books and records are so incomplete orinaccurate that the director is unable, through the normalsupervisory process, to determine the financial condition of thatcorporation or the details or purpose of any transaction ortransactions that may have a material effect on the financialcondition of that corporation, the director may issue a temporaryorder requiring the cessation of any activity or practice whichgave rise, whether in whole or in part, to the incomplete orinaccurate state of the books or records, or affirmative actionto restore such books or records to a complete and accuratestate, until the completion of the proceedings under thissection. Any temporary order issued under this subsection shallbecome effective upon service and, unless set aside, limited orsuspended by a court, shall remain in effect and enforceableuntil the earlier of the completion of the proceedings initiatedunder this section or the date on which the director determinesby examination or otherwise that the corporation's books andrecords are accurate and reflect the financial condition of thecorporation.

7. Whenever it shall appear to the director that theviolation or threatened violation or the unsafe or unsoundpractice or practices specified in the notice of charges servedupon the corporation or any director, officer, employee, agent,or other person participating in the conduct of the affairs ofsuch corporation pursuant to subsection 4 of this section, or thecontinuation thereof, is likely to cause insolvency orsignificant dissipation of assets or earnings of the corporation,or is likely to weaken the condition of the corporation orotherwise prejudice the interests of its depositors prior to thecompletion of the proceedings conducted pursuant to saidsubsection, the director may issue a temporary order, effectiveimmediately, requiring the corporation or such director, officer,employee, agent, or other person to cease and desist from anysuch violation or practice and to take affirmative action toprevent such insolvency, dissipation, condition, or prejudicepending completion of such proceedings. Such order shall remaineffective and enforceable pending the completion of theadministrative proceedings pursuant to such notice and until suchtime as the director shall dismiss the charges specified in suchnotice or if a cease and desist order is issued against thecorporation or such director, officer, employee, agent, or otherperson, until the effective date of such order. The corporation,director, officer, employee, agent, or other person may, withinten days after having been served with a temporary cease anddesist order, apply to the circuit court of Cole County for anorder setting aside, limiting, or suspending the enforcement,operation, or effectiveness of such order.

8. If any corporation, or any director, officer, employee,agent, or other person participating in the conduct of theaffairs of such corporation shall fail or refuse to comply withany duly issued order provided for in this chapter and chapter362, RSMo, the corporation or such director, officer, employee,agent, or other person shall pay a civil penalty of not more thanone thousand dollars per day for each day the failure or refusalshall continue. The penalty shall be assessed and collected bythe director of the division. In determining the amount of thepenalty, the director shall take into account the appropriatenessof the penalty with respect to the size of the financialresources and good faith of the corporation or person charged,the gravity of the violation, the history of previous violations,and such other matters as justice may require. In addition tothe penalty, the director may, in his discretion, report thedelinquency to the attorney general, with a request that heproceed as provided in section 361.270, and in the event of suchrequest, the attorney general shall proceed.

(RSMo 1939 § 7904, A.L. 1967 p. 445, A.L. 1977 S.B. 420, A.L. 1985 H.B. 408, A.L. 1990 H.B. 1456)

Prior revisions: 1929 § 5310; 1919 § 11698

Effective 4-30-90