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or his gross negligence in the operation or management of the insurer or concern or a willful disregard for its safety and soundness, and, in addition, has evidenced his unfitness to participate in the conduct of the affairs of such insurer, the Commission may serve upon such director, officer, or other person written notice of its intention to remove him from office or to prohibit his further participation in any manner in the conduct of the affairs of the insurer.
(3) The Commission may, if necessary for the protection of the insurer or the interests of its policyholders, by written notice to such effect served upon a director, officer, or other person referred to in paragraph (1), suspend him from office or prohibit him from further participation in any manner in the conduct of the affairs of the insurer. Such suspension or prohibition shall become effertive upon service of such notice and, unless stayed by a court in proceedings authorized by subsection (d) of this section, shall remain in effect pending the completion of the administrative proceedings pursuant to the notice served under paragraph (1) or (2) of this subsection and until such time as the Commission shall dismiss the charges specified in such notice, or, if an order or removal or prohibition is issued against the director or officer or other person, until the effective date of any such order. Copies of any such notice shall also be served upon the corporation of which he is a director or officer or in the conduct of whose affairs he has participated. A notice of intention to remove a director, officer, or other person from office or to prohibit his participation in the conduct of the affairs of an insurer shall contain a statement of the facts constituting grounds therefor, and shall fix a time and place at which a hearing will be held thereon. Such hearing shall be fixed for a date not earlier than thirty days nor later than sixty days after the date of service of such notice, unless an earlier or a later date is set by the Commission at the request of (A) such director or officer or other person, and for good cause shown, or (B) the Attorney General of the United States. Unless such director, officer, or other person shall appear at the hearing in person or by a fully authorized representative, he shall be deemed to have consented to the issuance of an order of such removal or prohibition. In the event of such consent, or if upon the record made at any such hearing the Commission shall find that any of the grounds specified in such notice has been established, the Commission may issue such orders of suspension or removal from office, or prohibition from participation in the conduct of the affairs of the insurer, as he may deem appropriate. Any such order shall become effective at the expiration of thirty days after service upon such insurer and the director, officer, or other person concerned (except in the case of an order issued upon consent, which shall become effective at the time specified therein). Such order shall remain effective and enforceable except to such extent as it is stayed, modified, terminated, or set aside by action of the agency or a reviewing court.
(d) Within ten days after any director, officer, or other person has been suspended from office or prohibited from participation in the conduct of the affairs of an insurer under subsection (c) of this section, such director, officer, or other person may apply to the United States district court or the United States court of any territory within the jurisdiction of which the home office of the insurer is located, or the United States District Court for the District of Columbia, for a stay of such suspension or prohibition pending the completion of the administrative proceedings pursuant to the notice served upon such director, officer, or other person under subsection (c) of this section, and such court shall have jurisdiction to stay such suspension or prohibition.
(e) Any federally guaranteed insurer which violates or any officer, director, employee, agent, or other person participating in the conduct of the affairs of such an insurer who violates the terms of any order which has become final and was issued pursuant to this section, shall forfeit and pay a civil penalty of not more than $10,000 per day for each day during which such violation continues. The Commission shall have authority to assess such a civil penalty, after giving notice and an opportunity to the insurer or officer, director, employees, agent, or other person to submit data, views, and arguments, and after giving due consideration to the appropriateness of the penalty with respect to the size or financial resources and good faith of the insurer or person charged, the gravity of the violation, and any data, views, and arguments submitted. The Commission may collect such civil penalty by agreement with the insurer or other person or by bringing an action in the appropriate United States district court, except that in any such action the insurer or other person against whom the penalty has been assessed shall have a right to a trial de novo.
(f) (1) Any hearing provided for in this section shall be held in the Federal judicial district or in the territory in which the principal place of business of the insurer is located unless the party afforded the hearing consents to a hearing in another place, and shall be conducted in a manner consistent with the provisions of chapter 5 of title 5, United States Code, except that any such hearing shall be private unless the Commission after consideration of the views of the party afforded the hearing determines that a public hearing is necessary to protect the public interest. After such hearing, and within ninety days after the Commission has notified the parties that the case has been submitted to it for final decision, it shall render its decision (which shall include findings of fact upon which its decision is predicated) and shall issue and serve upon each party to the proceeding an order or orders consistent with the provisions of this section. Judicial review of any such order shall be exclusively as provided in this subsection. Unless a petition for review is timely filed in a court of appeals of the United States, as provided in pa ragraph (2) of this subsection, and there. after until the record in the proceeding has been filed as so provided, the Commission may at any time, upon such notice and in such manner as it shall deem proper, modify, terminate, or set aside any such order. Upon such filing of the record, the Commission may modify, terminate, or set aside any such order with permission of the court.
(2) Any party to the proceeding, or any person required by an order issued under this section to cease and desist from any of the violations or practices stated therein, may obtain a review of any order served pursuant to paragraph (1) of this subsection (other than an order issued with the consent of the insurer. director, officer, or other person, or an order issued under paragraph (1) of subsection (c) of this section) by the filing in the court of appeals of the United States for the circuit in which the home office of the insurer is located, or in the United States Court of Appeals for the District of Columbia Circuit, within thirty days after the date of service of such order, a written petition praying that the order of the Commission be modified, terminated, or set aside. A copy of such petition shall be forthwith transmitted by the clerk of the court to the Commission, and thereupon the Commission shall file in the court the record in the proceeding, as provided in section 2112 of title 28. Upon the filing of such petition, such court shall have jurisdiction, which upon the filing of the record shall except as provided in the last sentence of paragraph (1) of this subsection be exclusive, to affirm, modify, terminate, or set aside, in whole or in part, the order of the Commission. Review of such proceeding shall be had as provided in chapter 7 of title 5, United States Code. The judgment and decree of the court shall be final, subject only to review by the Supreme Court upon a writ of certiorari, as provided in section 1254 of title 28, United States Code.
(3) The commencement of proceedings for judicial review under paragraph (2) of this subsection shall not, unless specifically ordered by the court, operate as a stay of any order issued by the Commission.
(g) The Commisison may apply to the United States district court or the United States court of any territory, within the jurisdiction of which the principal place of business of the insurer is located, for the enforcement of any effective and outstanding notice or order issued under this section, and such courts shall have jurisdiction and power to order and require compliance therewith; but except as otherwise provided in this section no court shall have jurisdiction to affect by injunction or otherwise the issuance or enforcement of any notice or order under this section, or to review, modify, terminate, or set aside any such notice or order. (h) As used in this section
(1) the terms "cease and desist order which has become final" and "order which has become final" means a cease and desist order or an order, issued by the Commission with the consent of the insurer or the director or officer or other person concerned, or with respect to which no petition for review of the action of the Commission has been filed and perfected in a court of appeals as specified in paragraph (2) of subsection (h), or with respect to which the action of the court in which said petition is so filed is not subject to further review by the Supreme Court of the United States in proceedings provided for in said paragraph, or an order issued under paragraph (1) of subsection (g) of this section : and
(2) the term “violation" includes without limitation any action (alone or with another or others) for or toward causing, bringing about, participating in, counseling, or aiding or abetting a violation.
(i) Any service required or authorized to be made by the Commission under this section may be made by registered mail, or in such other manner reasonably calculated to give actual notice as the Commission may by regulation or otherwise provide.
(j) In the course of or in connection with any proceeding under this section, the Commission, or any designated representative thereof, including any person designated to conduct any hearing under this section, shall have the power to administer oaths and affirmations, to take or cause to be taken depositions, and to issue, revoke, quash, or modify subpenas and subpenas duces tecum ; and such Commission is empowered to make rules and regulations with respect to any such proceedings. The attendance of witnesses and the production of documents provided for in this subsection may be required from any place in any State or in any territory or other place subject to the jurisdiction of the United States at any designated place where such proceeding is being conducted. Any party to proceedings under this section may apply to the United States District Court for the District of Columbia, or the United States district court or the United States court of any territory in which such proceeding is being conducted or where the witness resides or carries on business, for enforcement of any subpena or subpena duces tecum issued pursuant to this subsection, and such courts shall have jurisdiction and power to order and require compliance therewith. Witnesses subpenaed under this section shall be paid the same fees and mileage that are paid witnesses in the district courts of the United States. Any court having jurisdiction of any proceeding instituted under this section by a corporation or a director or officer thereof, may allow to any such party such reasonable expenses and attorneys' fees as it deems just and proper; and such expenses and fees shall be paid by the corporation or from its assets.
COMPETITION SEC. 109. (a) The Commission shall not adopt any rule or regulation or exercise any other authority granted to it under this Act in such a manner as to impose a burden on competition not necessary or appropriate in furtherance of the purposes of this Act, and in all cases shall adopt the least anticompetitive alternative to protecting policyholders and the public interest.
(b) Except as provided herein, nothing contained in this Act shall affect the applicability of the antitrust laws to the business of insurance.
(c) Notwithstanding any other provision of law, the Federal antitrust laws shall be applicable to federally chartered insurers in their conduct of the business of insurance with respect to those activities that are exempt from certain State regulation as specified in section 204 of this Act. For purposes of this section, the Federal antitrust laws shall include the Sherman Antitrust Act (15 U.S.C. 1 and following), the Clayton Act (15 U.S.C. 12 and following), the Federal Trade Commission Act (15 U.S.C. 41 and following).
TITLE II-FEDERAL CHARTERING OF INSURANCE COMPANIES
SEC. 201. (a) The Commission is authorized to issue a charter to any stock, mutnal, or reciprocal insurer, reinsurer, or surety, the United States branch of an alien insurer or surety, or any other alien insurer or surety maintaining in the United States at all times trust funds of not less than $50,000,000 or such lesser amount as may be approved by the Commission, for the security of policyholders and claimants in accordance with such rules, regulations, and procedures as the Commission may prescribe.
(b) (1) Notwithstanding the provisions of the law of any State, any stock, mutual, or reciprocal insurer, a Lloyds organization, or a surety, organized or incorporated under the authority of State law, having been certified by the Commission as otherwise eligible to become a federally chartered insurer and upon the majority vote of its stockholders, or in the case of a nonstock insurer, a majority of its policyholders or members, voting in person or by proxy at a meeting called for such purpose, shall be issued a Federal charter. (2) Upon the issuance of the Federal charter
(A) the State charter or similar other authority of organization of the insurer shall be preempted and terminated, except that any such insurer shall be deemed to continue its corporate or other existence for all purposes of Federal and State law; and
(B) the insurer shall be deemed to be authorized to do business in any State. (3) Notwithstanding the provisions of paragraph (2), the appropriate authority of a State may, for cause and upon a showing to the satisfaction of the Commission that such action is necessary or justified, revoke the authority of a federally chartered insurer to do business in that State.
(c) Upon the issuance of such a charter, all insurance obligations of the federally chartered insurer shall be guaranteed in accordance with the provisions of title I of this Act.
(d) The Commission may, by rule, prohibit any alien insurer, other than the United States branch of an alien insurer, from transacting an insurance or surety business in any State of the United States unless such alien insurer is chartered under the provisions of this Act, but such prohibition shall not extend to reinsurance other than reinsurance under which the alien insurer assumes reinsurance in excess of a 90 per centum quota share of the ceding insurer's insurance business or any line thereof.
(e) The principal place of business of a federally chartered insurer shall be designated in its charter. The principal place of business of an existing insurer electing to obtain a Federal charter under this Act shall be deemed to be the State in which it was formerly chartered unless it designates at the time of filing its application for a charter or at any time after such a charter is issued another State with the approval of the Commission.
(f) (1) A federally chartered insurer may elect to surrender its Federal charter, together with all right, power, authority, and entitlements granted there under or incident thereto, upon the majority vote of its stockholder or, in the case of a nonstock insurer, the majority vote of its policyholders or members, voting in person or by proxy at a meeting called for such purpose. The notice of such meeting shall be given at least thirty days prior thereto and shall contain a certified statement of the Commission, prepared for such purpose and at the expense of the insurer, setting forth the financial condition of the insurer and its ability to meet its insurance obligations. The Commission shall prepare such certified statement within sixty days of a written request therefor from the board of directors or other similar governing body of the insurer.
(2) The election of a federally chartered insurer to surrender its Federal charter may be made upon such terms and conditions, not inconsistent with the provisions of this Act, as the vote authorizing such election may provide. The Commission shall not certify the surrender of the insurer's Federal charter and the date thereof until such terms and conditions have been met.
(g) Except as otherwise specifically provided in this Act, a federally chartered insurer shall have the powers of a business corporation chartered in the District of Columbia under the District of Columbia Business Corporation Act, and shall be subject to the provisions of such Act.
SEC. 202. (a) (1) A federally chartered insurer may be formed by any number of persons, but in no event less than three individuals. Such persons shall transmit to the Commission verified articles of organization in such form and with such content as the Commission may prescribe, including generally, the object for which the insurer is formed, the line or lines of insurance or surety which it intends to transact and the States in which it is currently doing business or proposes to do business within the five-year period following its application for a Federal charter. Such articles of organization shall include, or be accompanied by, the articles of incorporation, charter, or constitution of the organization, the bylaws, and the biographical background of the organizers, directors, and proposed officers of the organization.
(2) The material filed with the Commission shall state the capital and surplus, in the case of a stock insurer, or guaranty fund, in the case of an insurer other than a stock insurer, which shall not be less than such amount as the Commission may, by rule, prescribe. No portion of such capital, surplus, or guaranty fund shall consist of surplus notes or any other form of direct or indirect indebtedness.
(3) In the case of a group or fleet of insurers under common management or subject to the effective control of one person, including, but not limited to, a holding company, no one or more of such insurers (other than alien insurers)
constituting such group or fleet of insurers or insurers under common management or control shall be chartered unless all shall be so chartered or a plan for such chartering is filed with the Commission for its approval.
(4) Any person exercising or possessing effective control of a federally chartered insurer shall be subject to the regulatory authority of the Commission including, but not limited to, its powers of examination and audit.
(5) No insurer whose policyholders are liable to assessment under the contract of insurance issued by it shall be chartered under the provisions of this Act.
(b) No Federal charter shall be issued in the name of an insurer whose name is identical with or so similar to the name of an insurer already licensed or authorized in one or more of the United States as reasonably likely to cause confusion or be misleading or deceptive to policyholders or claimants.
(c) Nothing in this Act is intended, nor shall it be deemed, to authorize any insurer to engage in both a life and property and liability insurance business in any State which precludes an insurer from transacting both a life and property and liability insurance business.
(d) (1) Unless the articles of organization or other documents or material filed by the applicant are earlier returned to the applicant by the Commission because of legal insufficiency, the nature of such insufficiency having been stated in writing by the Commission, the Commission shall, not later than ninety days following the filing of the application for a Federal charter, approve or disapprove the issuance of such charter, except, that if a financial examination or audit of the applicant or any affiliated or related person has been commenced by the Commission but has not been completed, the Commission may extend the period for a further period of ninety days.
(2) At any time within the ninety-day period or extension specified in paragraph (1) of this subsection, the Commission may, upon notice of not less than ten days, hold a hearing not less than thirty days nor more than ninety days after such notice inquiring into the financial condition of the applicant or any affiliated or related person or upon the fitness of such applicant to receive a Federal charter, and notice of such hearing shall stay the running of the time specified in paragraph (1) of this subsection. Such notice shall specify the matters to be considered and the persons to be interrogated at such hearing. Failure of the applicant or any affiliated or related person to whom notice was provided to appear at such hearing may be deemed to be an abandonment of the application for a Federal charter.
(e) Upon its approval of the application, the Commission shall issue a charter to the insurer whereupon the insurer shall have the power
(1) to adopt and use a seal or insigne;
(2) to have perpetual succession until such time as it is dissolved by the act of its stockholders, policyholders, or members, or by law, or until such charter is revoked by the Commission;
(3) to enter into contracts ;
(4) to sue and be sued; complain, and defend, in any court of law or equity ;
(5) to elect or appoint directors or other members of its governing body, to elect or appoint officers or managers and to prescribe their duties and compensation ;
(6) to prescribe through its governing body bylaws or other code of internal regulation for the conduct of its internal affairs including, but not limited to, the manner in which its shares, or other muniments of ownership, shall be transferred, its governing body elected or appointed, its officers or managers elected or appointed, its property transferred, its general business conducted, and the privileges granted it by law exercised and enjoyed ;
(7) to exercise through its governing body, officers, managers, or agents all such powers and authority as may be necessary or appropriate to transacting its insurance business; and
(8) with the approval of the Commission, to conduct any other business which is complementary or incidental to the insurance business or the functions performed therein if any such other business is conducted subject to any limitations the Commission may prescribe for the protection of the interests of policyholders of the insurer, after taking into account the effect of any such other business on the insurer's existing business and its surplus, the proposed allocation of the estimated cost of any such business