Illinois CUs Fail to Make Civil Penalty Orders Confidential

The Illinois Credit Union League tried; but failed to get legislation passed that would have made civil penalty orders confidential.

HB 1572, when it was introduced, would have made civil penalty orders confidential supervisory information. The Department would have been prohibited from disclosing the civil penalty order to any person, except that once such an order is a final administrative decision of the Department and has been adjudicated to finality, a concise syllabus of the order may be posted on the Department's official website.

However, this provision of the bill was deleted before the bill became law.

But the bill raised the regulatory threshold for the assessing a civil money penalty.

There is now a two part test.

First, the Secretary of Financial and Professional Regulation has to reasonably determine that the credit union has committed a violation of the Act, any rule adopted in accordance with the Act, or any order of the Secretary issued pursuant to his or her authority under the Act or has engaged or participated in any unsafe or unsound practice.

Second, before the Secretary of Financial and Professional Regulation can assess a civil money penalty, the Department must further determine that the credit union’s action has directly resulted in a substantial and material financial loss or created a reasonable probability that a substantial and material financial loss will directly result, or that violation or unsafe or unsound practice constituted willful misconduct and a material breach of fiduciary duty of any director, officer, or committee member of the credit union.

The bill goes on to state that "absent compelling and extraordinary circumstances, no civil penalty shall be assessed, unless the financial loss or probable financial loss is equal to or greater than either 1 percent of the credit union's total assets for the immediately preceding 12-month period, or 1 percent of the credit union's total gross income for the immediately preceding 12-month period, whichever is less."