Connecticut Seal

Substitute Senate Bill No. 1035

Public Act No. 03-259

AN ACT CONCERNING WHITE COLLAR CRIME ENFORCEMENT, THE CONNECTICUT UNIFORM SECURITIES ACT AND CORPORATE FRAUD ACCOUNTABILITY AND VOLUNTEER FIREFIGHTERS AND MEMBERS OF VOLUNTEER AMBULANCE SERVICES OR COMPANIES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

 

"Account". Sections 36a-155 and 36a-365.

 

"Additional proceeds". Section 36a-746e.

 

"Advance fee". Sections 36a-510, 36a-485 and 36a-615.

 

"Advertise" or "advertisement". Sections 36a-485 and 36a-510.

 

"Agency bank". Section 36a-285.

 

"Alternative mortgage loan". Section 36a-265.

 

"Amount financed". Section 36a-690.

 

"Annual percentage rate". Section 36a-690.

 

"Annual percentage yield". Section 36a-316.

 

"Annuities". Section 36a-455a.

 

"Applicant". Section 36a-736.

 

"APR". Section 36a-746a.

 

"Assessment area". Section 36a-37.

 

"Associate". Section 36a-184.

 

"Associated member". Section 36a-458a.

 

"Bank". Section 36a-30.

 

"Bankers' bank". Section 36a-70, as amended by this act.

 

"Banking business". Section 36a-425.

 

"Basic services". Section 36a-437a.

 

"Billing cycle". Section 36a-565.

 

"Bona fide nonprofit organization". Section 36a-655.

 

"Branch". Sections 36a-145, 36a-410 and 36a-435b.

 

"Branch or agency net payment entitlement". Section 36a-428n.

 

"Branch or agency net payment obligation". Section 36a-428n.

 

"Broker". Section 36a-746a.

 

"Business and industrial development corporation". Section 36a-626.

 

"Business and property in this state". Section 36a-428n.

 

"Capital". Section 36a-435b.

 

"Cash advance". Section 36a-564.

 

"Cash price". Section 36a-770.

 

"Certificate of incorporation". Section 36a-435b.

 

"Closely related activities". Sections 36a-250 and 36a-455a.

 

"Collective managing agency account". Section 36a-365.

 

"Commercial vehicle". Section 36a-770.

 

"Community bank". Section 36a-70, as amended by this act.

 

"Community credit union". Section 36a-37.

 

"Community development bank". Section 36a-70, as amended by

 

this act.

 

"Community reinvestment performance". Section 36a-37.

 

"Connecticut holding company". [Section] Sections 36a-53, as

 

amended by this act, and 36a-410.

 

"Construction loan". Section 36a-458a.

 

"Consumer". Sections 36a-155, 36a-676 and 36a-695.

 

"Consumer Credit Protection Act". Section 36a-676.

 

"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800.

 

"Consumer collection agency". Section 36a-800.

 

"Consummation". Section 36a-746a.

 

"Controlling interest". Section 36a-276.

 

"Corporate". Section 36a-435b.

 

"Credit". Sections 36a-645 and 36a-676.

 

"Credit manager". Section 36a-435b.

 

"Creditor". Sections 36a-676, 36a-695 and 36a-800.

 

"Credit card", "cardholder" and "card issuer". Section 36a-676.

 

"Credit clinic". Section 36a-695.

 

"Credit rating agency". Section 36a-695.

 

"Credit report". Section 36a-695.

 

"Credit sale". Section 36a-676.

 

"Credit union service organization". Section 36a-435b.

 

"Credit union service organization services". Section 36a-435b.

 

"De novo branch". Section 36a-410.

 

"Debt". Section 36a-645.

 

"Debt adjustment". Section 36a-655.

 

"Debt mutual fund". Sections 36a-275 and 36a-459a.

 

"Debt securities". Sections 36a-275 and 36a-459a.

 

"Debtor". Section 36a-655.

 

"Deliver". Section 36a-316.

 

"Deposit". Section 36a-316.

 

"Deposit account". Sections 36a-136, as amended by this act, and

 

36a-316.

 

"Deposit account charge". Section 36a-316.

 

"Deposit account disclosures". Section 36a-316.

 

"Deposit contract". Section 36a-316.

 

"Deposit services". Section 36a-425.

 

"Depositor". Section 36a-316.

 

"Director". Section 36a-435b.

 

"Earning period". Section 36a-316.

 

"Electronic payment instrument". Section 36a-596.

 

"Eligible account holder". Section 36a-136, as amended by this act.

 

"Eligible collateral". Section 36a-330.

 

"Equity mutual fund". Sections 36a-276 and 36a-459a.

 

"Equity security". Sections 36a-276 and 36a-459a.

 

"Executive officer". Sections 36a-263 and 36a-469c, as amended by

 

this act.

 

"Federal Credit Union Act". Section 36a-435b.

 

"Federal Home Mortgage Disclosure Act". Section 36a-736.

 

"Fiduciary". Section 36a-365.

 

"Filing fee". Section 36a-770.

 

"Finance charge". Sections 36a-690 and 36a-770.

 

"Financial institution". Sections 36a-41, 36a-44a, 36a-155, 36a-316,

 

    36a-330, 36a-435b and 36a-736.

 

"Financial records". Section 36a-41.

 

"First mortgage broker". Section 36a-485.

 

"First mortgage correspondent lender". Section 36a-485.

 

"First mortgage lender". Section 36a-485.

 

"First mortgage loan". Sections 36a-485, 36a-705 and 36a-715.

 

"Foreign banking corporation". Section 36a-425.

 

"General facility". Section 36a-580.

 

"Global net payment entitlement". Section 36a-428n.

 

"Global net payment obligation". Section 36a-428n.

 

"Goods". Sections 36a-535 and 36a-770.

 

"Graduated payment mortgage loan". Section 36a-265.

 

"Guardian". Section 36a-365.

 

"High cost home loan". Section 36a-746a.

 

"Holder". Section 36a-596.

 

"Home banking services". Section 36a-170.

 

"Home banking terminal". Section 36a-170.

 

"Home improvement loan". Section 36a-736.

 

"Home purchase loan". Section 36a-736.

 

"Home state". Section 36a-410.

 

"Immediate family member". Section 36a-435b.

 

"Insider". Section 36a-454b.

 

"Installment loan contract". Sections 36a-535 and 36a-770.

 

"Insurance". Section 36a-455a.

 

"Insurance bank". Section 36a-285.

 

"Insurance department". Section 36a-285.

 

"Interest". Section 36a-316.

 

"Interest rate". Section 36a-316.

 

"Lender". Sections 36a-746a and 36a-770.

 

"Lessor". Section 36a-676.

 

"License". Section 36a-626.

 

"Licensee". Sections 36a-510, 36a-596 and 36a-626.

 

"Limited branch". Section 36a-145.

 

"Limited facility". Section 36a-580.

 

"Loan broker". Section 36a-615.

 

"Loss". Section 36a-330.

 

"Made in this state". Section 36a-770.

 

"Managing agent". Section 36a-365.

 

"Manufactured home". Section 36a-457b.

 

"Material litigation". Section 36a-596.

 

"Member". Section 36a-435b.

 

"Member business loan". Section 36a-458a.

 

"Member in good standing". Section 36a-435b.

 

"Membership share". Section 36a-435b.

 

"Money order". Section 36a-596.

 

"Money transmission". Section 36a-365.

 

"Mortgage insurance". Section 36a-725.

 

"Mortgage lender". Sections 36a-485, 36a-510 and 36a-705.

 

"Mortgage loan". Sections 36a-261, 36a-265 and 36a-457b.

 

"Mortgage rate lock-in". Section 36a-705.

 

"Mortgage servicing company". Section 36a-715.

 

"Mortgagor". Section 36a-715.

 

"Motor vehicle". Section 36a-770.

 

"Multiple common bond membership". Section 36a-435b.

 

"Municipality". Section 36a-800.

 

"Net outstanding member business loan balance". Section 36a-458a.

 

"Net worth". Sections 36a-441a, 36a-458a and 36a-596.

 

"Network". Section 36a-155.

 

"Nonrefundable". Sections 36a-498 and 36a-521.

 

"Note account". Sections 36a-301 and 36a-456b.

 

"Office". Section 36a-316.

 

"Officer". Section 36a-435b.

 

"Open-end credit plan". Section 36a-676.

 

"Open-end loan". Section 36a-565.

 

"Organization". Section 36a-800.

 

"Originator". Sections 36a-485 and 36a-510.

 

"Out-of-state holding company". Section 36a-410.

 

"Outstanding". Section 36a-596.

 

"Passbook savings account". Section 36a-316.

 

"Payment instrument". Section 36a-596.

 

"Periodic statement". Section 36a-316.

 

"Permissible investment". Section 36a-596.

 

"Person". Section 36a-184.

 

"Post". Section 36a-316.

 

"Prepaid finance charge". Section 36a-746a.

 

"Prepayment penalty". Section 36a-746a.

 

"Prime quality". Section 36a-596.

 

"Principal amount of the loan". Section 36a-510.

 

"Processor". Section 36a-155.

 

"Public deposit". Section 36a-330.

 

"Purchaser". Section 36a-596.

 

"Qualified financial contract". Section 36a-428n.

 

"Qualified public depository" and "depository". Section 36a-330.

 

"Real estate". Section 36a-457b.

 

"Records". Section 36a-17.

 

"Related person". Section 36a-53, as amended by this act.

 

"Relocate". Sections 36a-145 and 36a-462a.

 

"Residential property". Section 36a-485.

 

"Retail buyer". Sections 36a-535 and 36a-770.

 

"Retail credit transaction". Section 42-100b.

 

"Retail deposits". Section 36a-70, as amended by this act.

 

"Retail installment contract". Sections 36a-535 and 36a-770.

 

"Retail installment sale". Sections 36a-535 and 36a-770.

 

"Retail seller". Sections 36a-535 and 36a-770.

 

"Reverse annuity mortgage loan". Section 36a-265.

 

"Sales finance company". Sections 36a-535 and 36a-770.

 

"Savings department". Section 36a-285.

 

"Savings deposit". Section 36a-316.

 

"Secondary mortgage broker". Section 36a-510.

 

"Secondary mortgage correspondent lender". Section 36a-510.

 

"Secondary mortgage lender". Section 36a-510.

 

"Secondary mortgage loan". Section 36a-510.

 

"Security convertible into a voting security". Section 36a-184.

 

"Senior management". Section 36a-435b.

 

"Share". Section 36a-435b.

 

"Simulated check". Sections 36a-485 and 36a-510.

 

"Single common bond membership". Section 36a-435b.

 

"Social purpose investment". Section 36a-277.

 

"Standard mortgage loan". Section 36a-265.

 

"Table funding agreement". Section 36a-485.

 

"Tax and loan account". Sections 36a-301 and 36a-456b.

 

"The Savings Bank Life Insurance Company". Section 36a-285.

 

"Time account". Section 36a-316.

 

"Transaction". Section 36a-215.

 

"Travelers check". Section 36a-596.

 

"Troubled Connecticut credit union". Section 36a-448a, as amended

 

by this act.

 

"Troubled financial institution". Section 36a-215.

 

"Uninsured bank". Section 36a-70, as amended by this act.

 

"Unsecured loan". Section 36a-615.

 

"Warehouse agreement". Section 36a-485.

Sec. 2. Section 36a-50 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) (1) Whenever the commissioner finds as the result of an investigation that any person has violated any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, the commissioner may send a notice to such person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: (A) A statement of the time, place, and nature of the hearing; (B) a statement of the legal authority and jurisdiction under which the hearing is to be held; (C) a reference to the particular sections of the general statutes, regulations, rules or orders alleged to have been violated; (D) a short and plain statement of the matters asserted; (E) the maximum penalty that may be imposed for such violation; and (F) a statement indicating that such person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice.

(2) If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such person fails to appear at the hearing. After the hearing, if the commissioner finds that the person has violated any such provision, regulation, rule or order, the commissioner may, in the commissioner's discretion and in addition to any other remedy authorized by law, order that a civil penalty not exceeding [seven thousand five hundred] one hundred thousand dollars per violation be imposed upon such person. [, except that in the case of a violation of sections 36a-746b to 36a-746g, inclusive, the commissioner may order that a civil penalty not exceeding fifteen thousand dollars per violation be imposed upon such person. ] If such person does not request a hearing within the time specified in the notice or fails to appear at the hearing, the commissioner may, as the facts require, order that a civil penalty not exceeding [seven thousand five hundred] one hundred thousand dollars per violation be imposed upon such person. [, except that in the case of a violation of sections 36a-746b to 36a-746g, inclusive, the commissioner may order that a civil penalty, not exceeding fifteen thousand dollars per violation, be imposed upon such person. ]

(3) Each action undertaken by the commissioner under this subsection shall be in accordance with the provisions of chapter 54.

(b) Whenever it appears to the commissioner that any such person has violated, is violating or is about to violate any such provision, regulation, rule or order, the commissioner may, in the commissioner's discretion and in addition to any other remedy authorized by law: (1) Bring an action in the superior court for the judicial district of Hartford to enjoin the acts or practices and to enforce compliance with any such provision, regulation, rule or order. Upon a proper showing, a permanent or temporary injunction, restraining order or writ of mandamus shall be granted and a receiver or conservator may be appointed for such person or such person's assets. The court shall not require the commissioner to post a bond; (2) seek a court order imposing a penalty not to exceed [seven thousand five hundred] one hundred thousand dollars per violation against any such person found to have violated any such provision, regulation, rule or order; [issued by the commissioner; ] or (3) apply to the superior court for the judicial district of Hartford for an order of restitution whereby such person shall be ordered to make restitution of any sums shown by the commissioner to have been obtained by such person in violation of any such provision, regulation, rule or order, plus interest at the rate set forth in section 37-3a. Such restitution shall, at the option of the court, be payable to the receiver or conservator appointed pursuant to this subsection, or directly to the person whose assets were obtained in violation of any such provision, regulation, rule or order. Whenever the commissioner prevails in any action brought under this subsection, the court may allow to the state its costs.

(c) The provisions of this section shall not apply to chapters 672a, 672b and 672c.

Sec. 3. Section 36a-53 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) As used in this section, (1) "related person" means a director, officer, employee, independent contractor, manager or general partner, and (2) "Connecticut holding company" means a holding company that holds a subsidiary that is a Connecticut bank.

(b) (1) Whenever the commissioner finds as the result of an investigation that any [officer or director] related person of any Connecticut bank, [or officer or director, as defined in section 36a-435b, of any] Connecticut holding company, Connecticut credit union or [any officer, director, manager or general partner of a] Connecticut credit union service organization [(1)] (A) has violated or is violating any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition imposed in writing by the commissioner, [(2)] (B) has breached or is breaching any written agreement with the commissioner, [(3)] (C) has engaged or participated in or is engaging or participating in any unsafe or unsound practice in connection with any bank, Connecticut holding company, Connecticut credit union, federal credit union or credit union service organization, [(4)] (D) has been or is charged in any information, indictment or complaint with the commission of or participation in a crime which is punishable by imprisonment for a term exceeding one year under state or federal law, and continued service or participation by such [officer, director, manager or general partner] related person may pose a threat to the interests of depositors or members, or threatens to impair public confidence in any bank, Connecticut holding company, Connecticut credit union, federal credit union or Connecticut credit union service organization, [(5)] (E) has used or is using such [officer's, director's, manager's or general partner's official] related person's position in a manner contrary to the interest of any bank, Connecticut holding company, Connecticut credit union, federal credit union or credit union service organization, or its depositors or members, or [(6)] (F) has been or is negligent in the performance of such [officer's, director's, manager's or general partner's] related person's duties, after having been warned in writing by the commissioner to discontinue any such continuing delinquency, the commissioner may send notice to such [officer, director, manager or general partner] related person by registered or certified mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. The notice shall be deemed received by the [officer, director, manager or general partner] related person on the earlier of the date of actual receipt or seven days after mailing or sending. Any such notice shall include: [(A)] (i) A statement of the time, place and nature of the hearing; [(B)] (ii) a statement of the legal authority and jurisdiction under which the hearing is to be held; [(C)] (iii) a reference to the particular sections of the general statutes, regulations, rules or orders alleged to have been violated; [(D)] (iv) a short and plain statement of the matters asserted; and [(E)] (v) a statement indicating that such [officer, director, manager or general partner] related person may file a written request for a hearing on the matters asserted within fourteen days of receipt of the notice. If a hearing is requested within the time specified in the notice, the commissioner shall hold a hearing upon the matters asserted in the notice unless such [officer, director, manager or general partner] related person fails to appear at the hearing. After the hearing, if the commissioner finds that any of the grounds set forth in [subdivisions (1) to (6)] subparagraphs (A) to (F), inclusive, of this [subsection] subdivision exist with respect to such [officer, director, manager or general partner] related person, the commissioner shall order the removal of such [officer, director, manager or general partner] related person from office and from any participation in the management of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization. If such [officer, director, manager or general partner] related person fails to appear at the hearing, the commissioner shall order the removal of such [officer, director, manager or general partner] related person from office and from any participation in the management of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization. If the commissioner finds that the protection of the Connecticut bank, Connecticut holding company or its subsidiary that is a Connecticut bank, Connecticut credit union or Connecticut credit union service organization, or the interest of its depositors, depositors of its subsidiary that is a Connecticut bank or members requires immediate action, the commissioner may suspend any such [officer, director, manager or general partner] related person from office and from further participation in the management of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization, by incorporating a finding to that effect in such notice. The suspension or prohibition shall become effective upon receipt of such notice and, unless stayed by a court, shall remain in effect until the entry of a permanent order or the dismissal of the matters asserted.

(2) Any related person who has been removed or suspended from office pursuant to an order issued under this subsection may not continue to hold or commence holding office as a related person of any bank, Connecticut credit union, federal credit union, licensee or registrant under titles 36a and 36b or holding company that holds a subsidiary that is a bank, while such order is in effect, without the written consent of the commissioner.

[(b)] (c) Whenever it appears to the commissioner that any [such] Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization (1) is violating, has violated or is about to violate any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition imposed in writing by the commissioner, (2) is breaching, has breached or is about to breach any written agreement with the commissioner, or (3) is engaging, has engaged or is about to engage, in an unsafe or unsound practice, the commissioner may send notice and take action against the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization in accordance with section 36a-52. If the commissioner finds that the actual or threatened violation, breach or unsafe or unsound practice or practices specified in such notice is likely to cause insolvency or substantial dissipation of assets or earnings of the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization, or is likely to otherwise seriously prejudice the interests of its depositors or members, the commissioner may incorporate a finding to that effect in such notice and issue a temporary order requiring the Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization to cease and desist from any such violation, breach or practice. The temporary order shall become effective upon receipt and, unless set aside or modified by a court, shall remain in effect until the effective date of a permanent order or the dismissal of the matters asserted.

[(c)] (d) (1) Whenever the commissioner finds as the result of an investigation that any [such officer, director, manager, general partner,] Connecticut bank, Connecticut holding company, Connecticut credit union, [or] Connecticut credit union service organization or any related person of any such entity has (A) violated any provision of the general statutes within the jurisdiction of the commissioner, or any regulation, rule or order adopted or issued thereunder, or any condition imposed in writing by the commissioner, (B) breached any written agreement with the commissioner, (C) engaged or participated in any unsafe or unsound practice, or (D) used such [officer's, director's, manager's or general partner's official] related person's position in a manner contrary to the interest of any bank, Connecticut holding company, Connecticut credit union, federal credit union or credit union service organization, or its depositors or members, the commissioner may send notice to and take action against such [officer, director, manager, general partner,] Connecticut bank, Connecticut holding company, Connecticut credit union, [or] Connecticut credit union service organization or related person regarding the violation, breach, unsafe or unsound practice, or misuse of [official] position in accordance with section 36a-50, as amended by this act. Any finding made by the commissioner pursuant to this subdivision shall be considered a violation of this subsection for purposes of section 36a-50, as amended by this act.

(2) Notwithstanding the provisions of section 36a-50, as amended by this act, unless the violation, breach, unsafe or unsound practice, or misuse of [official] position found to have occurred pursuant to this subsection and section 36a-50, as amended by this act, is such that it (A) is part of a pattern of misconduct, (B) has caused or is likely to cause a loss other than a de minimis loss to any bank, Connecticut holding company, Connecticut credit union, federal credit union or credit union service organization, (C) will result or has resulted in a pecuniary gain to [an officer, director, manager or general partner] a related person of any Connecticut bank, Connecticut holding company, Connecticut credit union or Connecticut credit union service organization, or (D) is a violation of [section 36a-53a] sections 36a-53a to 36a-56, inclusive, or sections 36a-746b to 36a-746g, inclusive, the civil penalty the commissioner may impose under this subsection and section 36a-50, as amended by this act, shall not exceed [one] ten thousand dollars.

(3) In determining the amount of any penalty imposed under this subsection and section 36a-50, as amended by this act, the commissioner shall take into account (A) the size of the financial resources and good faith of the Connecticut bank, Connecticut holding company, Connecticut credit union, Connecticut credit union service organization, [officer or director of such Connecticut bank, Connecticut credit union or officer, director, manager or general partner of such Connecticut credit union service organization] or related person, (B) the gravity of the violation, breach, unsafe or unsound practice or misuse of [official] position, (C) the history of previous violations, breaches, unsafe or unsound practices, or misuse of [official] position, and (D) such other matters as justice may require, except that this subdivision does not apply to any violation of section 36a-53a and sections 36a-746b to 36a-746g, inclusive.

[(d)] (e) In connection with any investigation or proceeding under this section and section 36a-50, as amended by this act, the commissioner shall make reasonable efforts to obtain from a federal banking or credit union agency any relevant information that the commissioner knows to be in the possession of such agency.

(f) The resignation, termination of employment or separation, including a separation caused by the closing of the institution, of any related person against whom the commissioner may issue an order under this section, shall not affect the authority of the commissioner to issue any notice and proceed under this section against such related person if such notice is sent before the end of the six-year period beginning on the date of such resignation, termination of employment or separation.

Sec. 4. Section 36a-54 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

Any officer, agent, or employee of any financial institution who makes any false entry upon the collection or forwarding register or any other book of any such institution, or who fails correctly to record on the books of such institution any change in its assets or liabilities, with intent to deceive the commissioner or the officers or auditors of any such institution, and any person who, with like intent, aids or abets any such officer, agent, or employee in the violation of any provision of this section, shall be imprisoned not more than ten years. A finding by the commissioner as a result of an investigation of any such false entry, failure to correctly record or aiding or abetting shall be considered a violation of this section for purposes of the administrative enforcement of sections 36a-50 to 36a-53, inclusive, as amended by this act. The commissioner shall refer to the Chief State's Attorney any evidence found by the commissioner of a criminal violation of the provisions of this section.

Sec. 5. Section 36a-55 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

Any person who, wilfully and maliciously, makes, circulates or transmits to another any false statement, rumor or suggestion, written, printed or oral, which is, directly or by inference, derogatory to the financial condition or affects the solvency or financial standing of any bank, out-of-state bank that maintains in this state a branch as defined in section 36a-410, Connecticut credit union or federal credit union, or who counsels, aids or induces another to transmit or circulate any such statement or rumor, shall be fined not more than one thousand dollars or imprisoned not more than one year or both. A finding by the commissioner as a result of an investigation of any such making, circulating or transmitting, or counseling, aiding or inducing shall be considered a violation of this section for purposes of the administrative enforcement of sections 36a-50 to 36a-53, inclusive, as amended by this act. The commissioner shall refer to the Chief State's Attorney any evidence found by the commissioner of a criminal violation of the provisions of this section.

Sec. 6. Section 36a-56 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

Any person who knowingly makes any false statement or report, or wilfully overvalues any land, property or security, with intent to defraud and for the purpose of influencing in any way the action of a bank, out-of-state bank that maintains in this state a branch as defined in section 36a-410, Connecticut credit union, small loan licensee or any first or secondary mortgage lender or broker licensee, upon any application, advance, commitment, loan or extension of credit, or any change, extension, renewal or refinancing thereof, or the acceptance, release or substitution of security therefor, and upon which such bank, credit union or licensee relies in taking such action, shall be fined not more than five hundred dollars or imprisoned not more than one year, or both. A finding by the commissioner as a result of an investigation of any such making or overvaluing shall be considered a violation of this section for purposes of the administrative enforcement of sections 36a-50 to 36a-53, inclusive, as amended by this act. The commissioner shall refer to the Chief State's Attorney any evidence found by the commissioner of a criminal violation of the provisions of this section.

Sec. 7. Subsection (c) of section 36a-70 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(c) The person or persons organizing a Connecticut bank shall execute, acknowledge and file with the commissioner an application to organize. Such application to organize shall include: (1) A proposed certificate of incorporation stating: (A) The name and type of the Connecticut bank; (B) the town in which the main office is to be located; (C) in the case of a capital stock Connecticut bank, the amount, authorized number and par value, if any, of shares of its capital stock; (D) the minimum amount of equity capital with which the Connecticut bank shall commence business, which amount may be less than its authorized capital but shall not be less than that required by subsection (b) of this section; (E) the name, occupation and residence, post office or business address of each organizer and prospective initial director of the Connecticut bank; and (2) a proposed business plan. The organizers shall separately file with the commissioner a notice of the residence of each organizer and prospective initial director whose residence address is not included in the proposed certificate of incorporation. In connection with an application to organize a Connecticut bank, the commissioner may, in the commissioner's discretion, and in accordance with section 29-17a, arrange for the fingerprinting or for conducting any other method of positive identification required by the State Police Bureau of Investigation of each organizer and prospective initial director, to be used in conducting a criminal history records check.

Sec. 8. Subsection (f) of section 36a-125 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(f) Upon application by the constituent banks, and upon receipt of a copy of the agreement of merger or consolidation, certified by the secretaries of the respective constituent final banks and certified by the agents for the organizers of the respective constituent temporary banks as having been duly approved in accordance with subsection (b) of this section, the commissioner shall determine whether such merger or consolidation will promote public convenience, whether benefits to the public clearly outweigh possible adverse effects, including, but not limited to, an undue concentration of resources and decreased or unfair competition, and whether the terms thereof are reasonable and in accordance with law and sound public policy. The commissioner, if the commissioner so determines, shall approve the merger or consolidation. The commissioner shall not approve such merger or consolidation: (1) If it involves the acquisition of a Connecticut bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [or] (2) if the resulting bank including all insured depository institutions which are affiliates of the resulting bank, upon consummation of the merger or consolidation, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits; or (3) if the programs, policies and procedures relating to anti-money laundering activities of the constituent banks, or the proposed programs, policies and procedures of the resulting bank relating to anti-money laundering activities, are inadequate, or the constituent banks do not have a record of compliance with anti-money laundering laws and regulations. In addition, the commissioner shall not approve such merger or consolidation unless the commissioner considers whether: (A) The investment and lending policies of the constituent banks, or the proposed investment and lending policies of the resulting bank, are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the services or proposed services of the resulting bank are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the constituent banks have sufficient capital to ensure, and agree to ensure, that the resulting bank will comply with applicable minimum capital requirements; (D) the constituent banks have sufficient managerial resources to operate the resulting bank in a safe and sound manner; and (E) the proposed merger or consolidation will not substantially lessen competition in the banking industry of this state. The commissioner shall not approve such merger or consolidation unless the commissioner makes the findings required by section 36a-34 and, in the case of a merger or consolidation of a mutual banking institution, determines that the interests of depositors are protected or served by the agreement of merger or consolidation. After approval of the merger or consolidation by the commissioner, a copy of the agreement and a copy of the commissioner's approval shall be filed in the office of the Secretary of the State. The resulting bank shall not commence business unless its insurable accounts and deposits are insured by the Federal Deposit Insurance Corporation or its successor agency.

Sec. 9. Subdivision (1) of subsection (b) of section 36a-135 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(1) The commissioner shall approve a conversion under this subsection if the commissioner determines that (A) the converting institution has complied with all applicable provisions of law, and (B) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations.

Sec. 10. Subdivision (1) of subsection (c) of section 36a-135 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(1) The commissioner shall approve a conversion under this subsection if the commissioner determines that: (A) The converting institution has complied with all applicable provisions of law; (B) the converting institution has equity capital at least equal to the minimum equity capital required for the organization of a Connecticut bank; (C) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations; and [(C)] (D) the proposed conversion will serve the public necessity and convenience.

Sec. 11. Subsection (j) of section 36a-136 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(j) The commissioner shall approve a conversion under this section if the commissioner determines that: (1) The converting institution has complied with all applicable provisions of law; (2) the conversion would not result in any reduction of the converting institution's amount of equity capital, less any subordinated debt recognized as bona fide capital; (3) the conversion would not result in a taxable reorganization of the converting institution under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended; (4) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations; and [(4)] (5) the plan of conversion is fair to depositors. The converted institution shall not commence business unless its insurable accounts and deposits are insured by the Federal Deposit Insurance Corporation or its successor agency.

Sec. 12. Subdivision (1) of subsection (b) of section 36a-137 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(1) The commissioner shall approve a conversion under this subsection if the commissioner determines (A) that the converting bank has complied with all applicable provisions of law, and (B) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations.

Sec. 13. Subdivision (1) of subsection (d) of section 36a-137 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(1) The commissioner shall approve a conversion under this subsection if the commissioner determines that: (A) The converting bank has complied with all applicable provisions of law; (B) the converting bank has equity capital at least equal to the minimum equity capital for the organization of a Connecticut bank; (C) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations; and [(C)] (D) the proposed conversion will serve public necessity and convenience.

Sec. 14. Subsection (c) of section 36a-138 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(c) The commissioner shall approve a conversion under this section if the commissioner determines that: (1) The converting institution has complied with all applicable provisions of law; (2) the proposed conversion will serve public necessity and convenience; [and] (3) in the case of a conversion to a mutual savings bank or mutual savings and loan association, the converting institution has equity capital at least equal to the minimum equity capital required for the organization of a Connecticut bank; and (4) the programs, policies and procedures of the converting institution relating to anti-money laundering activity are adequate, and the converting institution has a record of compliance with anti-money laundering laws and regulations. The converted institution shall not commence business unless its insurable accounts and deposits are insured by the Federal Deposit Insurance Corporation or its successor agency.

Sec. 15. Subsection (c) of section 36a-185 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(c) The commissioner shall disapprove such offer, invitation, request, agreement or acquisition if: (1) It involves the acquisition of the voting securities or securities convertible into voting securities of a bank that has not been in existence and continuously operating for at least five years, or a holding company, the subsidiary banks of which have not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [or] (2) the acquiring person, including all insured depository institutions which are affiliates of the person, upon consummation of the acquisition, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits; (3) the commissioner cannot make the findings required by section 36a-34; or (4) the programs, policies and procedures of the acquiring person relating to anti-money laundering activity are inadequate, and the acquiring person does not have a record of compliance with anti-money laundering laws and regulations. In making the determination to disapprove or not to disapprove such offer, invitation, request, agreement or acquisition, the commissioner shall consider whether: (A) The investment and lending policies of the bank referred to in the acquisition statement are consistent with safe and sound banking practices and will benefit the economy of this state; (B) the services or proposed services of the bank referred to in the acquisition statement are consistent with safe and sound banking practices and will benefit the economy of this state; (C) the proposed acquisition will not substantially lessen competition in the banking industry of this state; and (D) the acquiring person, if such person would be the beneficial owner of twenty-five per cent or more of any class of voting securities of the bank or holding company referred to in the acquisition statement, (i) has sufficient capital to ensure, and agrees to ensure, that the bank referred to in the acquisition statement will comply with applicable minimum capital requirements, and (ii) has sufficient managerial resources to operate the bank or holding company referred to in the acquisition statement in a safe and sound manner. [The commissioner shall disapprove such offer, invitation, request, agreement or acquisition unless the commissioner can make the findings required by section 36a-34. ]

Sec. 16. Section 36a-210 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) With the approval of the commissioner, (1) a Connecticut bank or a Connecticut credit union may sell all or a significant part of its assets and business to a bank, and (2) a Connecticut credit union may sell all or a significant part of its assets and business to a Connecticut credit union or a federal credit union. The selling Connecticut bank must have been in existence and continuously operating for at least five years unless the commissioner waives this requirement. The commissioner shall not approve such sale if (A) the purchasing institution, including all insured depository institutions which are affiliates of such institution, upon consummation of the sale, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits, or (B) the programs, policies and procedures relating to anti-money laundering activities of the purchasing institution are inadequate, or the purchasing institution does not have a record of compliance with anti-money laundering laws and regulations. The selling and purchasing institutions shall file with the commissioner a written agreement approved and executed by a majority of the governing board of each institution prescribing the terms and conditions of the transaction. In the case of a sale of all of the assets and business of the selling institution, the terms of the agreement shall at least provide for full payment of the amounts due depositors, share account holders and creditors of the selling institution. Payment for all or part of the assets of the selling institution may be made in cash or by making available on demand to depositors, share account holders and other creditors thereof funds on deposit with the purchasing institution. Prior to the sale of all or substantially all of the assets and business of an institution pursuant to this section, the selling institution shall obtain authorization for the sale by the affirmative vote of at least: [(A)] (i) Two-thirds of the voting power of the outstanding shares of each class of stock, whether or not otherwise entitled to vote, in the case of a capital stock Connecticut bank; [(B)] (ii) two-thirds of the voting power of the members or depositors, in the case of a mutual savings and loan association or a Connecticut credit union; and [(C)] (iii) two-thirds of the governing board and two-thirds of the voting power of the corporators, in the case of mutual savings bank, which voting power shall, in any event, be no less than twenty-five corporators.

(b) In lieu of the vote required by subsection (a) of this section, the commissioner may certify in writing that the protection of depositors, share account holders, members or creditors of the selling institution requires that the sale proceed without delay.

(c) When a Connecticut bank or Connecticut credit union has sold and conveyed or arranged to sell and convey all of its assets in accordance with this section, the governing board of the selling institution shall, after receiving the approval of the commissioner as provided in subsection (a), send a written notice of such sale or proposed sale to each of its depositors, share account holders and other known creditors and shall cause a copy of such notice to be published in a newspaper published in this state and having a circulation in the town in which the main office of such institution is located. Such notice shall inform the depositors, share account holders and creditors of the selling institution of the sale and of the terms thereof with reference to payment of depositors, share account holders and creditors. Such notice may provide that creditors other than depositors and share account holders who fail to present their claims to the selling institution within four months of the date of the notice shall be forever barred, and that creditors whose claims are presented within the time limited but which are disallowed by the selling institution shall commence an action to enforce their claims within three months of receipt of written notice disallowing their claims or be forever barred. Depositors or share account holders shall not be required to present claims for deposits or share accounts as shown by the records of the selling institution.

(d) At any time during the liquidation of the affairs of the selling institution, the governing board may have the privileges of a business corporation in voluntary dissolution as provided by law.

(e) After the claims of depositors, share account holders and creditors have been fully paid either by transfer to the purchasing institution or in cash, or barred, the liability of the selling institution for such claims shall cease.

(f) Any surplus remaining in the hands of the selling institution, after it has sold all its assets and business, shall, after payment of the expenses of liquidation, be distributed to those entitled by law to receive such surplus in the manner provided in the agreement of sale. Thereupon the governing board shall file a certificate with the commissioner stating that the affairs of the institution have been fully liquidated. Upon verifying the certificate as to the facts stated therein, the commissioner shall endorse the certificate "approved" and shall file a copy in the office of the Secretary of the State. Upon the finding by the Secretary of the State that the certificate complies with law, the secretary shall endorse the same "approved" and record the certificate. Thereupon the corporate existence of the institution shall cease.

(g) No Connecticut bank may purchase all or a significant part of the assets and business of a federal bank, a federal credit union or an out-of-state bank, and no Connecticut credit union may purchase all or a significant part of the assets and business of a federal credit union, without the approval of the commissioner. Such Connecticut bank or Connecticut credit union shall file with the commissioner an application that includes a copy of any notice, application and other information filed with any federal or state banking or credit union regulator in connection with such purchase and such additional information as may be required by the commissioner. The commissioner shall not approve such purchase if: (1) It involves the acquisition of a federal bank or out-of-state bank that has not been in existence and continuously operating for at least five years, unless the commissioner waives this requirement; [or] (2) the purchasing institution, including all insured depository institutions which are affiliates of such institution, upon consummation of the purchase, would control thirty per cent or more of the total amount of deposits of insured depository institutions in this state, unless the commissioner permits a greater percentage of such deposits; or (3) the programs, policies and procedures relating to anti-money laundering activities of the purchasing institution are inadequate, or the purchasing institution does not have a record of compliance with anti-money laundering laws and regulations.

(h) No bank or out-of-state bank may purchase or otherwise acquire the assets and business of a Connecticut bank or Connecticut credit union from the receiver of such bank or credit union without the approval of the commissioner.

Sec. 17. Section 36a-260 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) A Connecticut bank may make secured and unsecured loans, except as otherwise expressly limited by sections 36a-261 to [36a-265] 36a-266, inclusive.

(b) At least once a year, the governing board of each Connecticut bank shall adopt a loan policy governing loans made pursuant to sections 36a-260 to 36a-266, inclusive. The governing board of each Connecticut bank shall develop and implement internal controls that are reasonably designed to ensure compliance with such loan policy. The loan policy shall require applications for all loans, and address the categories and types of secured and unsecured loans offered by the bank, the manner in which loans will be made and approved, underwriting guidelines and collateral requirements, and, in accordance with safety and soundness, acceptable standards for title review, title insurance and appraiser qualifications, policies for the approval and selection of appraisers, appraisal and evaluation standards, and the bank's administration of the appraisal and evaluation process. The loan policy and any loan made pursuant to the policy shall be subject to the examination of the commissioner concerning safe and sound banking practices.

(c) The governing board of each Connecticut bank shall adopt a loan review policy that is designed to ensure that all material loans made by the Connecticut bank pursuant to sections 36a-260 to 36a-266, inclusive, are reviewed. The policy shall establish appropriate standards, consistent with prudent risk management principles, for the review to address the bank's compliance with the loan policy adopted pursuant to subsection (b) of this section and the need for plans to implement special collection, workout, divestiture or other means of bringing such loans into compliance with the loan policy. The loan review policy shall be appropriate to the size of the Connecticut bank, its financial condition and the nature and scope of its activities. The governing board shall also adopt, as part of the loan review policy, standards for determining which loans are material for purposes of this subsection. When adopting the materiality standards, the governing board shall consider, where appropriate, the inclusion of standards based on the size of the loan in relation to the Connecticut bank's total capital and reserves for loan and lease losses, and such other factors that may present material risks to the institution. The loan review policy and any loan reviewed pursuant to such policy shall be subject to the examination of the commissioner concerning safe and sound banking practices. At least semiannually, the governing board of each Connecticut bank or a committee designated by such board shall conduct an assessment of the loan reviews. The minutes of the meeting of such governing board or committee shall recite the results of the assessment of the loan reviews.

Sec. 18. Section 36a-262 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) Except as otherwise provided in this section, the total direct or indirect liabilities of any one obligor that are not fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, shall not exceed at the time incurred fifteen per cent of the equity capital and reserves for loan and lease losses of such bank. The total direct or indirect liabilities of any one obligor that are fully secured, however incurred, to any Connecticut bank, exclusive of such bank's investment in the investment securities of such obligor, shall not exceed at the time incurred ten per cent of the equity capital and reserves for loan and lease losses of such bank, provided this limitation shall be separate from and in addition to the limitation on liabilities that are not fully secured. For purposes of this section, a liability shall be considered to be fully secured if it is secured by readily marketable collateral having a market value, as determined by reliable and continuously available price quotations, at least equal to the amount of the liability. For purposes of determining the limitations of this section, in computing the liabilities of an obligor, a liability is incurred at the time of the closing of the transaction, unless such closing is preceded by a legally binding written commitment to enter into the transaction, in which case such liability is incurred at the time of commitment and is net of any liabilities of the obligor to such bank that will be paid with the proceeds of the commitment at the time of closing. The limitations provided for in this subsection may be exceeded for a period of time not to exceed six hours if at the closing of any transaction at which such obligor incurs such liabilities to a Connecticut bank in excess of such limitations, such bank immediately assigns or participates out to one or more other persons an amount that constitutes not less than the excess over the applicable limitation. [For purposes of this section, in computing the liabilities of a partnership the individual liabilities of the general partners shall be included; and in computing the individual liabilities of a general partner, the liabilities of the partnership shall be included. ] Obligations as endorser or guarantor of negotiable or nonnegotiable installment consumer paper which carry an agreement to repurchase on default, unless the bank's sole recourse is to an agreed reserve held by it, in which case the liability shall be excluded, a full recourse endorsement or an unconditional guarantee by the person, partnership, association or corporation transferring the same, shall be subject under this section to a limitation of fifteen per cent of the bank's equity capital and reserves for loan and lease losses in addition to the applicable limitations of this section with respect to the makers of such obligations; provided, upon certification by an officer of the bank designated for that purpose by the governing board that the responsibility of each maker of such obligations has been evaluated and the bank is relying primarily upon each such maker for the payment of such obligations, the limitations of this section as to the obligations of each maker shall be the sole applicable loan limitation; and provided such certification shall be in writing and shall be retained as part of the records of such bank.

(b) Liabilities of one obligor shall be attributed to another person and each such person shall be deemed to be an obligor when proceeds of a loan are to be used for the direct benefit of the other person, to the extent of the proceeds to be so used, or a common enterprise is deemed to exist between such persons. For purposes of this section, the proceeds of a loan to an obligor shall be deemed to be used for the direct benefit of another person and shall be attributed to the person when the proceeds, or assets purchased with the proceeds, are transferred to another person, other than in a bona fide arm's length transaction where the proceeds are used to acquire property, goods or services. For purposes of this section, a common enterprise shall be deemed to exist and liabilities of separate obligors shall be aggregated:

(1) When the expected source of repayment for each liability is the same for each obligor and neither obligor has another source of income from which the liability, together with the obligor's other liabilities, may be fully repaid. An employer shall not be treated as a source of repayment under this subdivision because of wages and salaries paid to an employee, unless the standards of subdivision (2) of this section are met;

(2) When loans are made (A) to obligors who are related directly or indirectly through common control, including where one obligor is directly or indirectly controlled by another obligor; and (B) substantial financial interdependence exists between or among the obligors. Substantial financial interdependence is deemed to exist when fifty per cent or more of one obligor's gross receipts or gross expenditures, on an annual basis, are derived from transactions with the other obligor. Gross receipts and expenditures include gross revenues, expenses, intercompany loans, dividends, capital contributions, and similar receipts or payments;

(3) When separate persons borrow from a Connecticut bank to acquire a business enterprise of which such obligors will own more than fifty per cent of the voting securities or voting interests, in which case a common enterprise is deemed to exist between the obligors for purposes of combining the acquisition loans; or

(4) When the commissioner determines, based upon an evaluation of the facts and circumstances of particular transactions, that a common enterprise exists.

(c) Loans to an obligor and its subsidiary, or to different subsidiaries of an obligor shall not be aggregated unless either the direct benefit or the common enterprise test is met. For purposes of this subsection, a corporation or a limited liability company is a subsidiary of an obligor if the obligor owns or beneficially owns directly or indirectly more than fifty per cent of the voting securities or voting interests of the corporation or company.

(d) Loans to a partnership, joint venture, limited liability company or association shall be deemed to be loans to each member of the partnership, joint venture, limited liability company or association. This provision shall not apply to limited partners in limited partnerships or to members of joint ventures, limited liability companies or associations unless the partners or members, by the terms of the partnership or membership agreement, are held generally liable for the debts or actions of the partnership, joint venture, limited liability company or association, and such terms are valid under applicable law. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met. Both the direct benefit and common enterprise tests are met between a partner or member of a partnership, joint venture, limited liability company or association and such partnership, joint venture, limited liability company or association, when loans are made to the partner or member to purchase an interest in the partnership, joint venture, limited liability company or association. Loans to partners or members of a partnership, joint venture, limited liability company or association are not attributed to other members of the partnership, joint venture, limited liability company or association unless either the direct benefit or the common enterprise test is met.

(e) Loans to foreign governments and their agencies and instrumentalities shall be aggregated only if the loans fail to meet either the means test or the purpose test at the time the loan is made. The means test is met if the obligor has resources or revenue of its own sufficient to service its debt obligations. If the government's support, excluding guarantees by a central government of the obligor's debt, exceeds the obligor's annual revenues from other sources, it shall be presumed that the means test has not been satisfied. The purpose test is met if the purpose of the loan is consistent with the purposes of the obligor's general business. In order to show that the means test or the purpose test has been satisfied, a Connecticut bank shall, at a minimum, retain in its files the following items:

(1) A statement, accompanied by supporting documentation, describing the legal status and the degree of financial and operational autonomy of the borrowing entity;

(2) Financial statements for the borrowing entity for a minimum of three years prior to the date the loan or extension of credit was made or for each year that the borrowing entity has been in existence, if less than three;

(3) Financial statements for each year the loan is outstanding;

(4) The bank's assessment of the obligor's means of servicing the loan, including specific reasons in support of that assessment. The assessment shall include an analysis of the obligor's financial history, its present and projected economic and financial performance, and the significance of any financial support provided to the obligor by third parties, including the obligor's central government; and

(5) A loan agreement or other written statement from the obligor which clearly describes the purpose of the loan. The written representation shall ordinarily constitute sufficient evidence that the purpose test has been satisfied. However, when, at the time the funds are disbursed, the bank knows or has reason to know of other information suggesting the obligor will use the proceeds in a manner inconsistent with the written representation, it may not, without further inquiry, accept the representation.

[(b)] (f) Obligations of the United States or this state, or of any town, city, borough or legally established district in this state which has the power to levy taxes for the payment of such obligations, shall not be subject to any limitation based upon such equity capital and reserves for loan and lease losses.

[(c)] (g) Obligations of any one obligor, with the exception of loans secured by mortgage of real estate and insured by the Federal Housing Administrator, which are secured or covered by guaranties, or by commitments or agreements to take over or to purchase, made by the United States or the Federal Reserve Bank or by any department, bureau, board, commission or establishment of the United States, including any corporation wholly owned, directly or indirectly by the United States, which, at the time of making such guaranty or commitment or agreement to take over or purchase, is authorized by law to enter into contracts with any financing institution guaranteeing such financing institution against loss of principal and interest on loans, taxes or advances or agreeing to take over or purchase the same, shall not be subject to any limitation based upon such equity capital and reserves for loan and lease losses.

[(d)] (h) Obligations of any one obligor secured by the pledge of direct or fully guaranteed obligations of the United States shall be limited to fifty per cent of such equity capital and reserves for loan and lease losses; except that obligations secured by the pledge of direct or fully guaranteed obligations of the United States which will mature in not more than eighteen months shall not be subject under this section to any limitation based upon such equity capital and reserves for loan and lease losses.

[(e)] (i) Any Connecticut bank may accept drafts or bills of exchange drawn upon it having not more than six months' sight to run, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods, or which grow out of transactions involving the domestic shipment of goods, provided shipping documents conveying or securing title are attached at the time of acceptance, or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples. No Connecticut bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its equity capital and reserves for loan and lease losses; provided the commissioner may authorize any Connecticut bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per cent of its equity capital and reserves for loan and lease losses; provided further, the aggregate of acceptances growing out of domestic transactions shall in no event exceed fifty per cent of such equity capital and reserves for loan and lease losses.

[(f)] (j) The following shall not be subject under this section to any limitation based upon such equity capital and reserves for loan and lease losses: (1) Obligations in the form of bankers' acceptances of other banks, provided such acceptances have at the time of discount not more than six months' sight, exclusive of days of grace, and are endorsed by at least one other bank; (2) obligations resulting from the purchase of securities subject to a resale agreement; and (3) the rental obligation of a lessee of real or personal property under a lease made or held by such bank.

[(g)] (k) Obligations of any one obligor which are secured by a first mortgage on real estate shall be limited to fifty per cent of such equity capital and reserves for loan and lease losses, provided the total obligations to any one obligor to which this subsection and subsection (a) of this section apply shall not exceed fifty per cent of such equity capital and reserves for loan and lease losses. Loans made to manufacturing, industrial or commercial borrowers when the bank looks for repayment out of the operations of the borrowers' business, relying primarily on the borrowers' general credit standing and forecast of operation, shall not be considered to be secured by a mortgage on real estate for purposes of this subsection, even though such loan may be secured by a mortgage on real estate.

Sec. 19. Subsection (a) of section 36a-263 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) As used in this section, "executive officer" has the meaning given to such term in 12 CFR 215.2 of Subpart A of Federal Reserve Board Regulation O, 12 CFR Part 215, as from time to time amended. With the exception of Sections 215. 7 and 215. 13 of Subpart A of Federal Reserve Board Regulation O, 12 CFR Part 215, as from time to time amended, Connecticut banks are subject to and shall comply with the restrictions contained in 12 CFR Sections 337. 3 and 349, as from time to time amended, and no executive officer, director or principal shareholder of a Connecticut bank or any of its affiliates shall knowingly receive, or knowingly permit any of such person's related interests to receive, from a Connecticut bank, directly or indirectly, any extension of credit that violates such restrictions. No executive officer, director, employee, agent or other person shall participate in any conduct of the affairs of the bank that violates this subsection.

Sec. 20. Subsection (a) of section 36b-15 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) The commissioner may by order deny, suspend or revoke any registration or by order restrict or impose conditions on the securities or investment advisory activities that an applicant or registrant may perform in this state if [he] the commissioner finds that (1) [that] the order is in the public interest, and (2) [that] the applicant or registrant or, in the case of a broker-dealer or investment adviser, any partner, officer, or director, any person occupying a similar status or performing similar functions, or any person directly or indirectly controlling the broker-dealer or investment adviser: (A) Has filed an application for registration which as of its effective date, or as of any date after filing in the case of an order denying effectiveness, was incomplete in any material respect or contained any statement which was, in light of the circumstances under which it was made, false or misleading with respect to any material fact; (B) has wilfully violated or wilfully failed to comply with any provision of sections 36b-2 to 36b-33, inclusive, or a predecessor statute or any regulation or order under said sections or a predecessor statute; (C) has been convicted, within the past ten years, of any misdemeanor involving a security, any aspect of the securities business, or any felony, provided any denial, suspension or revocation of such registration shall be in accordance with the provisions of section 46a-80; (D) is permanently or temporarily enjoined by any court of competent jurisdiction from engaging in or continuing any conduct or practice involving any aspect of the securities or commodities business; (E) is the subject of a cease and desist order of the commissioner or an order of the commissioner denying, suspending, or revoking registration as a broker-dealer, agent, investment adviser or investment adviser agent; (F) is the subject of any of the following sanctions that are currently effective or were imposed within the past [five] ten years: (i) An order issued by the securities administrator of any other state, Canadian province or territory, or by the Securities and Exchange Commission or the Commodity Futures Trading Commission denying, suspending or revoking registration as a broker-dealer, agent, investment adviser, investment adviser agent or a person required to be registered under the Commodity Exchange Act, [as amended,] 7 USC 1 et seq. , as from time to time amended, and the rules and regulations thereunder, or the substantial equivalent of those terms as defined in sections 36b-2 to 36b-33, inclusive, (ii) an order of the Securities and Exchange Commission or Commodity Futures Trading Commission suspending or expelling [him] such applicant, registrant or person from a national securities or commodities exchange or national securities or commodities association registered under the Securities Exchange Act of 1934 or the Commodity Exchange Act, [as amended,] 7 USC 1 et seq. , as from time to time amended, or, in the case of an individual, an order of the Securities and Exchange Commission or an equivalent order of the commodity futures trading commission barring [the] such individual from association with a broker-dealer or an investment adviser, (iii) a suspension, expulsion or other sanction issued by a national securities exchange or other self-regulatory organization registered under federal laws administered by the Securities and Exchange Commission or the Commodity Futures Trading Commission if the effect of the sanction has not been stayed or overturned by appeal or otherwise, (iv) a United States Post Office fraud order, or (v) a cease and desist order entered by the Securities and Exchange Commission or the securities agency or administrator of [another] any other state or Canadian province or territory; but [(aa) the commissioner may not] the commissioner may not (I) institute a revocation or suspension proceeding under this subparagraph more than [one year] five years from the date of the sanction relied on, and [(bb) he may not] (II) enter an order under this subparagraph on the basis of an order under [another] any other state act unless that order was based on facts which would constitute a ground for an order under this section; (G) may [under federal law] be denied registration under federal law as a broker-dealer, agent, investment adviser, investment adviser agent or as a person required to be registered under the Commodity Exchange Act, as amended, 7 USC 1 et seq. , and the rules and regulations promulgated thereunder, or the substantial equivalent of those terms as defined in sections 36b-2 to 36b-33, inclusive; (H) has engaged in fraudulent, dishonest or unethical practices in the securities or commodities business, including abusive sales practices in the business dealings of such applicant, registrant or person with current or prospective customers or clients; (I) is insolvent, either in the sense that [his] the liabilities of such applicant, registrant or person exceed [his assets] the assets of such applicant, registrant or person, or in the sense that [he] such applicant, registrant or person cannot meet [his] the obligations of such applicant, registrant or person as they mature; but the commissioner may not enter an order against a broker-dealer or investment adviser under this subparagraph without a finding of insolvency as to the broker-dealer or investment adviser; (J) is not qualified on the basis of such factors as training, experience, and knowledge of the securities business, except as otherwise provided in subsection (b) of this section; (K) has failed reasonably to supervise [his] the agents of such applicant or registrant if [he] the applicant, registrant or person is a broker-dealer or an agent charged with exercising supervisory authority on behalf of the broker-dealer, or [his] such applicant's or registrant's investment adviser agents if [he] the applicant or registrant is an investment adviser; (L) in connection with any investigation conducted pursuant to section 36b-26 or any examination under subsection (d) of section 36b-14, has made any material misrepresentation to the commissioner or upon request made by the commissioner, has withheld or concealed material information from, or refused to furnish material information to the commissioner, provided, there shall be a rebuttable presumption that any records, including, but not limited to, written, visual, audio, magnetic or electronic records, computer printouts and software, and any other documents, that are withheld or concealed from the commissioner in connection with any such investigation or examination are material, unless such presumption is rebutted by substantial evidence; or (M) has failed to pay the proper filing fee; but the commissioner may enter only a denial order under this subparagraph, and [he] the commissioner shall vacate any such order when the deficiency has been corrected. The commissioner may not institute a suspension or revocation proceeding on the basis of a fact or transaction known to [him] the commissioner when the registration became effective unless the proceeding is instituted within one hundred eighty days of the effective date of such registration.

Sec. 21. Section 36b-27 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) Whenever it appears to the commissioner after an investigation that any person or persons have violated, are violating or are about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, or that the further sale or offer to sell securities would constitute a violation of said sections or any such regulation, rule or order, or that any person or persons have engaged in a dishonest or unethical practice in the securities or commodities business within the meaning of sections 36b-31-15a to 36b-31-15d, inclusive, of the regulations of Connecticut state agencies, the commissioner may in the commissioner's discretion order the person or persons or any other person that is, was or would be a cause of the violation of such sections or any such regulation, rule or order, due to an act or omission such other person knew or should have known would contribute to such violation, to cease and desist from the violations or the causing of the violations of the provisions of said sections or of the regulations, rules or orders thereunder, or from the further sale or offer to sell securities constituting or which would constitute a violation of the provisions of said sections or of the regulations, rules or orders thereunder, or from further engaging in such dishonest or unethical practice. After such an order is issued, the person or persons named [therein] in the order may, within fourteen days after receipt of the order, file a written request for a hearing. [Said] Any such hearing shall be held in accordance with the provisions of chapter 54.

(b) Whenever it appears to the commissioner, after an investigation, that any person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, or that the further sale or offer to sell securities would constitute a violation of said sections or any such regulation, rule or order, or that such person or persons have engaged in a dishonest or unethical practice in the securities or commodities business within the meaning of sections 36b-31-15a to 36b-31-15d, inclusive, of the regulations of Connecticut state agencies, the commissioner may, in addition to any other remedy under this section, [(1)] order the person or persons to (1) make restitution of any sums shown to have been obtained in violation of any of the provisions of said sections or any such regulation, rule or order or as a result of such dishonest or unethical practice plus interest at the legal rate set forth in section 37-1, [and (2) order the person or persons to] (2) provide disgorgement of any sums shown to have been obtained in violation of any of the provisions of said sections or any such regulation, rule or order or as a result of such dishonest or unethical practice, or (3) both make restitution and provide disgorgement. After such an order is issued, the person or persons named [therein] in the order may, within fourteen days after receipt of the order, file a written request for a hearing. [Said] Any such hearing shall be held in accordance with the provisions of chapter 54.

(c) The commissioner, in the commissioner's discretion, may order any person who directly or indirectly controls a person liable under subsection (b) of this section to make restitution, [or to] provide disgorgement, or both, of any sums shown to have been obtained as a result of a dishonest or unethical practice or in violation of any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections. Such controlling person shall be liable jointly and severally with and to the same extent as the person liable under subsection (b) of this section, unless such controlling person allegedly liable under this subsection sustains the burden of proof that such person did not know, and in the exercise of reasonable care could not have known, of the existence of facts by reason of which the liability is alleged to exist. After such an order is issued, the person or persons named [therein] in the order may, within fourteen days after receipt of the order, file a written request for a hearing. [Said] Any such hearing shall be held in accordance with the provisions of chapter 54. There shall be contribution as in cases of contract among the several persons so liable under this subsection.

(d) (1) Whenever the commissioner finds as the result of an investigation that any person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, the commissioner may send a notice to such person or persons by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt. Any such notice shall include: (A) A reference to the title, chapter, regulation, rule or order alleged to have been violated; (B) a short and plain statement of the matter asserted or charged; (C) the maximum fine that may be imposed for such violation; and (D) the time and place for the hearing. [Such] Any such hearing shall be fixed for a date not earlier than fourteen days after the notice is mailed.

(2) The commissioner shall hold a hearing upon the charges made unless such person or persons fail to appear at the hearing. [Said] Any such hearing shall be held in accordance with the provisions of chapter 54. After the hearing if the commissioner finds that the person or persons have violated any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, the commissioner may, in the commissioner's discretion and in addition to any other remedy authorized by said sections, order that a fine not exceeding [ten] one hundred thousand dollars per violation be imposed upon such person or persons. If such person or persons fail to appear at the hearing, the commissioner may, as the facts require, order that a fine not exceeding [ten] one hundred thousand dollars per violation be imposed upon such person or persons. The commissioner shall send a copy of any order issued pursuant to this subsection by registered mail, return receipt requested, or by any express delivery carrier that provides a dated delivery receipt, to any person or persons named in such order.

(e) Whenever it appears to the commissioner that any person or persons have violated, are violating or are about to violate any of the provisions of sections 36b-2 to 36b-33, inclusive, or any regulation, rule or order adopted or issued under said sections, or that the further sale or offer to sell securities would constitute a violation of said sections or any such regulation, rule or order, the commissioner may, in the commissioner's discretion and in addition to any other remedy authorized by this section: (1) Bring an action in the superior court for the judicial district of Hartford to enjoin the acts or practices and to enforce compliance with sections 36b-2 to 36b-33, inclusive, or any such regulation, rule or order. Upon a proper showing a permanent or temporary injunction, restraining order or writ of mandamus shall be granted and a receiver or conservator may be appointed for the defendant or the defendant's assets. The court shall not require the commissioner to post a bond; (2) seek a court order imposing a fine not to exceed [ten] one hundred thousand dollars per violation against any person found to have violated any order issued by the commissioner; or (3) apply to the superior court for the judicial district of Hartford for an order of restitution whereby the defendants in such action shall be ordered to make restitution of those sums shown by the commissioner to have been obtained by them in violation of any of the provisions of sections 36b-2 to 36b-33, inclusive, or any such regulation, rule or order, plus interest at the rate set forth in section 37-3a. Such restitution shall, at the option of the court, be payable to the receiver or conservator appointed pursuant to this subsection, or directly to the persons whose assets were obtained in violation of any provision of sections 36b-2 to 36b-33, inclusive, or any such regulation, rule or order.

(f) Any time after the issuance of an order or notice provided for in subsection (a), (b) or (c) or subdivision (1) of subsection (d) of this section, the commissioner may accept an agreement by any respondent named in such order or notice to enter into a written consent order in lieu of an adjudicative hearing. The acceptance of a consent order shall be within the complete discretion of the commissioner. The consent order provided for in this subsection shall contain (1) an express waiver of the right to seek judicial review or otherwise challenge or contest the validity of the order or notice; (2) a provision that the order or notice may be used in construing the terms of the consent order; (3) a statement that the consent order shall become final when issued; (4) a specific assurance that none of the violations or dishonest or unethical practices alleged in the order or notice shall occur in the future; (5) such other terms and conditions as are necessary to further the purposes and policies of sections 36b-2 to 36b-33, inclusive; (6) the signature of each of the individual respondents evidencing such respondent's consent; and (7) the signature of the commissioner or of the commissioner's authorized representative.

Sec. 22. Subsection (f) of section 36b-29 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(f) No person may bring an action under this section more than two years after the date of the contract of sale or of the contract for investment advisory services, except that (1) with respect to actions arising out of intentional misrepresentation or fraud in the purchase or sale of any interest in any limited partnership not required to be registered under the Securities Act of 1933, no person may bring an action more than one year from the date when the misrepresentation or fraud is discovered, except that no such action may be brought more than five years from the date of such misrepresentation or fraud, [provided, with respect to an action pending on July 1, 1993, that asserts facts upon which a claim could be asserted under this section on and after July 1, 1993, and which claim is asserted prior to January 1, 1994, no such action may be brought for intentional misrepresentation or fraud that occurred more than five years prior to the date of the filing of the complaint in such action,] and (2) with respect to actions arising out of intentional misrepresentation or fraud in the purchase or sale of securities other than securities described in subdivision (1) of this subsection, no person may bring an action more than one year from the date when the misrepresentation or fraud is discovered or in the exercise of reasonable care should have been discovered, except that no such action may be brought more than three years from the date of such misrepresentation or fraud.

Sec. 23. Subsection (d) of section 36a-448a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(d) Each director, upon such director's election, shall take and subscribe to an oath or affirmation that the director (1) will diligently and honestly perform the duties of director in administering the affairs of the Connecticut credit union; (2) will remain responsible for the performance of the duties of director even if the director delegates the performance of such duties; and (3) will not knowingly or wilfully permit the violation of any law or regulation applicable to credit unions. Each such oath or affirmation shall be recorded in the minutes of the governing board, and the Connecticut credit union shall promptly file a copy of such minutes with the commissioner.

Sec. 24. Subdivision (1) of subsection (b) of section 36a-468a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) (1) The Commissioner of Banking shall not approve a merger pursuant to this section unless the Commissioner of Banking considers whether (A) the merging credit unions have engaged in any unsafe or unsound practice during the one-year period preceding the date on which the merger application is filed with the Commissioner of Banking; (B) the resulting credit union will be adequately capitalized; (C) the resulting credit union will have the managerial capability and the financial resources to serve the proposed membership; (D) the proposed merger will substantially lessen competition in the Connecticut credit union industry; [and] (E) the proposed merger will have a beneficial effect in meeting the convenience and needs of the proposed membership; and (F) the programs, policies and procedures of the merging credit unions or the resulting credit union relating to anti-money laundering activity are adequate, and the merging credit unions have a record of compliance with anti-money laundering laws and regulations.

Sec. 25. Subsection (e) of section 36a-468b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(e) The Commissioner of Banking shall approve a conversion under this section if the Commissioner of Banking determines that (1) the converting credit union has complied with the requirements of sections 36a-435a to 36a-472a, inclusive, and (2) the programs, policies and procedures of the converting credit union relating to anti-money laundering activity are adequate, and the converting credit union has a record of compliance with anti-money laundering laws and regulations.

Sec. 26. Subsection (b) of section 36a-469b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) When the Commissioner of Banking has been satisfied that all of the requirements of subsection (a) of this section, and all other requirements of sections 36a-435a to 36a-472a, inclusive, have been complied with, and the Commissioner of Banking determines that (1) the conversion would serve the economic needs of the proposed field of membership and is in accordance with sound credit union practices, (2) the converting credit union will have the managerial capacity and the financial resources to serve the proposed membership group, [and] (3) the converting credit union has adequate net worth to meet all applicable regulatory requirements, and (4) the programs, policies and procedures of the converting credit union relating to anti-money laundering activity are adequate, and the converting credit union has a record of compliance with anti-money laundering laws and regulations, the Commissioner of Banking shall (A) issue an approval of the conversion, which may contain such conditions as the Commissioner of Banking may require, and (B) issue a certificate of authority to engage in the business of a Connecticut credit union.

Sec. 27. Subsection (d) of section 36a-469c of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(d) The Commissioner of Banking shall not approve the conversion unless the commissioner determines that: (1) The converting credit union has complied with all applicable provisions of law; (2) the converting credit union has equity capital at least equal to the minimum equity capital required for the organization of the type of mutual Connecticut bank to which it is converting; (3) the proposed conversion will serve the public necessity and convenience; (4) conditions in the locality in which the proposed mutual Connecticut bank will transact business afford reasonable promise of successful operation; [and] (5) the proposed directors and executive officers possess capacity and fitness for the duties and responsibilities with which they will be charged; and (6) the programs, policies and procedures of the converting credit union relating to anti-money laundering activity are adequate, and the converting credit union has a record of compliance with anti-money laundering laws and regulations. If the commissioner cannot make such determination with respect to any such proposed director or proposed executive officer, the commissioner may refuse to allow such proposed director or proposed executive officer to serve in such capacity in the proposed mutual Connecticut bank. As used in this subsection, "executive officer" means every officer of the proposed mutual Connecticut bank who participates or has authority to participate, other than in the capacity of a director, in major policy-making functions of the proposed mutual Connecticut bank, regardless of whether such officer has an official title or whether such officer's title contains a designation of assistant or whether such officer serves without salary or other compensation. The vice president, the chief financial officer, secretary and treasurer of the proposed mutual Connecticut bank are presumed to be executive officers, unless, by resolution of the governing board or by the proposed mutual Connecticut bank's bylaws, any such officer is excluded from participation in major policy-making functions, other than in the capacity of a director of the proposed mutual Connecticut bank, and such officer does not actually participate in major policy-making functions.

Sec. 28. (NEW) (Effective October 1, 2003) Each director of a Connecticut bank, upon such director's election, shall take and subscribe to an oath or affirmation that the director: (1) Will diligently and honestly perform the duties of director in administering the affairs of the Connecticut bank; (2) will remain responsible for the performance of the duties of director even if the director delegates the performance of such duties; and (3) will not knowingly or wilfully permit the violation of any law or regulation applicable to Connecticut banks. Each such oath or affirmation shall be recorded in the minutes of the Connecticut bank, and the Connecticut bank shall promptly file a copy of such minutes with the Commissioner of Banking.

Sec. 29. (NEW) (Effective October 1, 2003) Each Connecticut bank shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq. , as from time to time amended, and any regulations adopted thereunder, as from time to time amended.

Sec. 30. (NEW) (Effective October 1, 2003) Each Connecticut credit union shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq. , as from time to time amended, and any regulations adopted thereunder, as from time to time amended.

Sec. 31. (NEW) (Effective October 1, 2003) Each broker-dealer shall comply with the applicable provisions of the Currency and Foreign Transactions Reporting Act, 31 USC Section 5311 et seq. , as from time to time amended, and any regulations adopted thereunder, as from time to time amended.

Sec. 32. (NEW) (Effective October 1, 2003) The Commissioner of Banking, in the commissioner's discretion and in accordance with section 29-17a of the general statutes, may arrange for the fingerprinting or for conducting any other method of positive identification required by the State Police Bureau of Investigation of each director of a Connecticut bank upon such director's re-election and each new officer of a Connecticut bank upon such officer's employment, to be used in conducting a criminal history records check.

Sec. 33. (NEW) (Effective October 1, 2003) After the inception of an investigation by the state, or after reasonable knowledge by a person of the fact that a state investigation is likely to begin, no individual or publicly held corporation shall alter, falsify, destroy or conceal any record, document or tangible object for the purposes of impeding, obstructing or influencing an investigation by the state pertaining to publicly held securities.

Sec. 34. (NEW) (Effective October 1, 2003) (a) No publicly held corporation or officer, employee, contractor, subcontractor, or agent of a publicly held corporation may discharge, demote, suspend, threaten, harass, or in any manner discriminate against an employee in the terms and conditions of employment because of any lawful act done by the employee (1) to provide information, cause information to be provided, or otherwise assist in an investigation regarding any conduct that the employee reasonably believes constitutes a violation of 18 USC Section 1341, 1343, 1344 or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of federal or state law relating to fraud against shareholders, when the information or assistance is provided to or the investigation is conducted by (A) a federal or state regulatory or law enforcement agency, (B) a member or committee of Congress or the General Assembly, or (C) a person with supervisory authority over the employee, or such other person working for the employer who has the authority to investigate, discover or terminate misconduct, or (2) to file, cause to be filed, testify, participate in, or otherwise assist in a proceeding filed or about to be filed, with any knowledge of the employer, relating to an alleged violation of 18 USC Section 1341, 1343, 1344 or 1348, any rule or regulation of the Securities and Exchange Commission, or any provision of federal or state law relating to fraud against shareholders.

(b) An employee who alleges discharge or other discrimination by any person in violation of subsection (a) of this section may bring an action in the Superior Court for damages and injunctive relief against such person, not later than one year after knowledge of the specific incident giving rise to such claim.

Sec. 35. (NEW) (Effective October 1, 2003) No accountant who conducts an audit of a publicly held corporation shall alter, destroy or conceal any documents sent, received or created in connection with such audit and containing conclusions, opinions, analyses, or financial data related to such audit for a period extending from the end of the fiscal period in which the audit was concluded until seven years after the conclusion of the audit.

Sec. 36. (NEW) (Effective October 1, 2003) (a) Each officer of a corporation organized under the laws of this state or authorized to transact business in this state who is subject to the requirements of 18 USC 1350 shall certify, in the manner set forth in said section and the rules and regulations adopted under said section by the United States Securities and Exchange Commission, and as from time to time amended, that the financial statements of the corporation fairly present, in all material respects, the financial condition and results of operations of the corporation.

(b) (1) Any chief executive officer or chief financial officer under subsection (a) of this section who certifies a financial statement of the corporation knowing that the statement does not fairly represent, in all material respects, the financial condition and results of operations of the corporation shall be fined not more than one million dollars or imprisoned not more than ten years, or both.

(2) Any chief executive officer or chief financial officer under subsection (a) of this section who wilfully certifies a financial statement of the corporation knowing that the statement does not fairly represent, in all material respects, the financial condition and results of operations of the corporation shall be fined not more than five million dollars or imprisoned not more than twenty years, or both.

Sec. 37. (NEW) (Effective October 1, 2003) (a) It shall be unlawful for a registered public accounting firm to violate the provisions of Section 10a(g) of the Securities Exchange Act of 1934.

(b) Any registered public accounting firm that violates subsection (a) of this section shall be subject to the penalties that the State Board of Accountancy may impose under subsection (a) of section 20-281a of the general statutes for conduct described in subdivision (10) of subsection (a) of section 20-281a of the general statutes.

Sec. 38. (NEW) (Effective October 1, 2003) (a) A violation of section 33 or sections 35 to 37, inclusive, of this act shall be deemed an unfair or deceptive trade practice under subsection (a) of section 42-110b of the general statutes, provided the provisions of section 42-110g of the general statutes shall not apply to such violation.

Sec. 39. (NEW) (Effective October 1, 2003) A person is guilty of filing a fraudulent report if the person (1) knowingly or recklessly files a report, as defined in section 20-279b of the general statutes, which the person knows contains an untrue statement of a material fact, or (2) knowingly or recklessly omits a material fact in a report, as defined in section 20-279b of the general statutes.

Sec. 40. Subsection (a) of section 20-280 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) [On and after October 1, 1992, there] There shall be a State Board of Accountancy which shall consist of [seven] nine members, to be appointed by the Governor, all of whom shall be residents of this state, [four] five of whom shall hold current, valid licenses to practice public accountancy and [three] four of whom shall be public members. Any persons serving on the board prior to October 1, 1992, shall continue to serve until a successor is appointed. Whenever an appointment of a licensee to the state board is to be made, the Connecticut Society of Certified Public Accountants shall submit to the Governor the names of five persons qualified for membership on the board and the Governor shall appoint one of such persons to said board, subject to the provisions of section 4-10. The Governor shall select a chairperson pursuant to section 4-9a. The term of each member of the board shall be coterminous with that of the Governor. Vacancies occurring during a term shall be filled by appointment by the Governor for the unexpired portion of the term. Upon the expiration of a member's term of office, such member shall continue to serve until his successor has been appointed. Any member of the board whose license under section 20-281d is revoked or suspended shall automatically cease to be a member of the board. No person who has served two successive complete terms shall be eligible for reappointment to the board. Appointment to fill an unexpired term shall not be considered to be a complete term. Any member who, without just cause, fails to attend fifty per cent of all meetings held during any calendar year shall not be eligible for reappointment.

Sec. 41. Subsection (b) of section 20-280b of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) The board may, in its discretion, issue an appropriate order to any person found to be in violation of an applicable statute or regulation, providing for the immediate discontinuance of the violation. The board may, through the Attorney General, petition the superior court for the judicial district in which the violation occurred, or in which the person committing the violation resides or does business, for the enforcement of any order issued by it and for appropriate temporary relief or a restraining order and shall certify and file in the court a transcript of the entire record of the hearing or hearings, including all testimony upon which such order was made and the findings and orders made by the board. The court may grant such relief by injunction or otherwise, including temporary relief, as it deems equitable and may make and enter a decree enforcing, modifying or enforcing as so modified, or setting aside, in whole or in part, any order of the board. The board, in its discretion, in lieu of or in addition to any other action authorized by law, may assess a civil penalty of up to [one] fifty thousand dollars against any person found to have violated any provision of the general statutes or any regulations adopted thereunder relating to the profession of public accountancy.

Sec. 42. Subsection (a) of section 20-281a of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(a) After notice and hearing pursuant to section 20-280c, the board may revoke any certificate, license or permit issued under section 20-281c, 20-281d or 20-281e; suspend any such certificate, registration, license or permit or refuse to renew any such certificate, license or permit; reprimand, censure, or limit the scope of practice of any licensee; impose a civil penalty not exceeding [one] fifty thousand dollars upon licensees or others violating provisions of section 20-281g or place any licensee on probation, all with or without terms, conditions and limitations, for any one or more of the following reasons:

(1) Fraud or deceit in obtaining a certificate, registration, license or permit;

(2) Cancellation, revocation, suspension or refusal to renew authority to engage in the practice of public accountancy in any other state for any cause;

(3) Failure, on the part of a holder of a license or permit under section 20-281d or 20-281e, to maintain compliance with the requirements for issuance or renewal of such license or permit or to report changes to the board under subsection (g) of section 20-281d or subsection (f) of section 20-281e;

(4) Revocation, limitation or suspension of the right to practice before any state or federal agency or the Public Company Accounting Oversight Board under the Sarbanes-Oxley Act of 2002, or any of the following actions taken by any such state or federal agency or said board against a licensee: (A) Suspension of or barring a licensee from serving as a corporate officer or director, (B) requiring a licensee to disgorge funds, or (C) suspension or barring a licensee from association with a public accounting firm;

(5) Dishonesty, fraud or negligence in the practice of public accountancy or in the filing or failure to file his own income tax returns;

(6) Violation of any provision of sections 20-279b to 20-281m, inclusive, or regulation adopted by the board under said sections;

(7) Violation of any rule of professional conduct adopted by the board under subdivision (4) of subsection (g) of section 20-280;

(8) Conviction of a felony, or of any crime an element of which is dishonesty or fraud, under the laws of the United States, of this state, or of any other state if the acts involved would have constituted a crime under the laws of this state, subject to the provisions of section 46a-80;

(9) Performance of any fraudulent act while holding a registration, certificate, license or permit issued under sections 20-279b to 20-281m, inclusive, or prior law;

(10) Any conduct reflecting adversely upon the licensee's fitness to engage in the practice of public accountancy; and

(11) Violation by anyone of any provision of section 20-281g.

Sec. 43. Subsection (c) of section 20-281k of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(c) Nothing herein shall require a licensee to keep any workpaper beyond the period prescribed in any other applicable statute, except that any workpaper prepared by a licensee in the course of an audit of a publicly held corporation shall be retained for the period described in section 35 of this act.

Sec. 44. Subsection (b) of section 53a-160 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Commercial bribery is a class [A misdemeanor] D felony.

Sec. 45. Subsection (b) of section 53a-161 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Receiving a commercial bribe is a class [A misdemeanor] D felony.

Sec. 46. Subsection (b) of section 53a-147 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Bribery is a class [D] C felony.

Sec. 47. Subsection (b) of section 53a-148 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Bribe receiving is a class [D] C felony.

Sec. 48. Subsection (b) of section 53a-149 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Bribery of a witness is a class [D] C felony.

Sec. 49. Subsection (b) of section 53a-166 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Hindering prosecution in the second degree is a class [D] C felony.

Sec. 50. Subsection (b) of section 53a-167 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Hindering prosecution in the third degree is a class [A misdemeanor] D felony.

Sec. 51. Subsection (b) of section 53a-150 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Bribe receiving by a witness is a class [D] C felony.

Sec. 52. Subsection (b) of section 53a-151 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2003):

(b) Tampering with a witness is a class [D] C felony.

Sec. 53. (NEW) (Effective from passage) (a) No employer shall discharge, or cause to be discharged, or in any manner discriminate against any employee who is an active volunteer firefighter or member of a volunteer ambulance service or company because such employee is late arriving to work or absent from work as a result of responding to a fire or ambulance call prior to or during the employee's regular hours of employment.

(b) Each employee covered by this section shall:

(1) Not later than thirty days after the effective date of this section or the date on which the employee is certified as a volunteer firefighter or member of a volunteer ambulance service or company, whichever is later, submit to the employer a written statement signed by the chief of the volunteer fire department or the medical director or chief administrator of the ambulance service or company, as the case may be, notifying the employer of the employee's status as a volunteer firefighter or member of a volunteer ambulance service or company;

(2) Make every effort to notify the employer that the employee may report to work late or be absent from work in order to respond to an emergency fire or ambulance call prior to or during the employee's regular hours of employment;

(3) If unable to provide prior notification to the employer of a late arrival to work or an absence from work in order to respond to an emergency fire or ambulance call, submit to the employer a written statement signed by the chief of the volunteer fire department or the medical director or chief administrator of the volunteer ambulance service or company, explaining why the employee was unable to provide such prior notification;

(4) At the employer's request, submit a written statement from the chief of the volunteer fire department or the medical director or chief administrator of the volunteer ambulance service or company verifying that such employee responded to a fire or ambulance call and specifying the date, time and duration of such response;

(5) Promptly notify the employer of any change to the employee's status as a volunteer firefighter or member of a volunteer ambulance service or company, including, but not limited to, the termination of such status.

(c) An employee who is discharged or discriminated against in violation of this section may, not later than one year after the date of the violation, bring an action in the superior court for the judicial district where the violation is alleged to have occurred or where the employer has its principal office, for the reinstatement of the employee's previous job, payment of back wages and reestablishment of employee benefits to which the employee would have otherwise been entitled if such violation had not occurred. The court may award the prevailing party costs, together with reasonable attorney's fees to be taxed by the court.

(d) For purposes of this section, "employer" means a person engaged in business who has employees, including the state and any of its political subdivisions.

Approved July 9, 2003