HB4713 96TH GENERAL ASSEMBLY

LRB096 15630 RLC 30861 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB4713

Introduced 1/4/2010, by Rep. Robert W. Pritchard

SYNOPSIS AS INTRODUCED:

See Index

Amends the Derogatory Statements About Banks Act. Changes the short title of the Act to the Derogatory Statements About Financial Institutions Act. Provides that a person shall not, for commercial purposes, use any investment rating or investment rating service as the basis for any statement or inference that the financial institution is in an unsafe or unsound condition, that the federally insured deposits held by the financial institution are vulnerable to loss, or that the owner of the deposits may be subjected to inconvenience with respect to any federally insured deposits. Provides that a person shall not, for commercial purposes, use the name, directly or by inference, of any State or federal regulatory agency or instrumentality as a source of information when making derogatory statements about the condition of one or more financial institutions, unless the person is citing publicly available information published by such regulatory agency or instrumentality. Provides that in addition to any cause of action that a financial institution may have against any person for damages caused by a violation of this Act, the Division of Banking of the Illinois Department of Financial and Professional Regulation is authorized to issue cease and desist orders against any person who violates the Act and to impose a civil monetary penalty of up to $10,000 for each violation of the Act or of such cease and desist order.

CORRECTIONAL BUDGET AND IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning criminal law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Derogatory Statements About Banks Act is amended by changing the title of the Act and Sections 0.01 and 1 and by adding Sections 2 and 3 as follows:

(720 ILCS 300/Act title)

An Act to prevent derogatory statements affecting financial institutions corporations doing a banking or trust business.

(720 ILCS 300/0.01) (from Ch. 17, par. 900)

Sec. 0.01. Short title. This Act may be cited as the Derogatory Statements About Financial Institutions Banks Act.

(Source: P.A. 86-1324.)

(720 ILCS 300/1) (from Ch. 17, par. 901)

Sec. 1. Derogatory statements about financial institutions. Any person who shall willfully and maliciously make, circulate, or transmit to another or others, any statements, rumor or suggestion, written, printed or by word of mouth, which is directly or by inference derogatory to the financial condition, with intent to affect the solvency or financial standing of any financial institution corporation doing a banking or trust business in this State, or any building and loan association or federal savings and loan association doing business in this State, or who shall counsel, aid, procure or induce another to start, transmit or circulate any such statement, rumor or suggestion, shall be guilty of a Class A misdemeanor: However, the truth of said statement, established by the maker thereof, shall be a complete defense in any prosecution under the provisions of this Act. For the purposes of this Section, "intent to affect the solvency or financial standing" shall include, but not be limited to, knowledge possessed by a reasonable person that the circulation of his or her statement, rumor or suggestion would have the likely effect of damaging the solvency or financial standing of the financial institution.

(Source: P.A. 77-2830.)

(720 ILCS 300/2 new)

Sec. 2. Commercial violations.

(a) A person shall not, for commercial purposes, make any statement, whether written or verbal, derogatory to the financial condition of any financial institution or to the safety of federally insured deposits maintained in accounts at any financial institution, in violation of this Section.

(b) A person shall not, for commercial purposes, use any investment rating or investment rating service as the basis for any statement or inference that the financial institution is in an unsafe or unsound condition, that the federally insured deposits held by the financial institution are vulnerable to loss, or that the owner of the deposits may be subjected to inconvenience with respect to any federally insured deposits.

(c) A person shall not, for commercial purposes, use the name, directly or by inference, of any State or federal regulatory agency or instrumentality as a source of information when making derogatory statements about the condition of one or more financial institutions, unless the person is citing publicly available information published by such regulatory agency or instrumentality. It shall be the obligation of the person making the statement to prove that such information was publicly available at the time of the statement made by the person.

(d) If any person, for commercial purposes, makes any statement, directly or by inference, derogatory to the financial condition or to the safety of deposits held in a financial institution, such person must disclose the following information in a written form that may be retained by the person to whom such statement was made:

(1) the person's statement about the financial condition or the safety of deposits held in the financial institution is not based on any information obtained from a State or federal regulator that has examined the financial institution;

(2) an investment rating or investment rating service is not a reliable indicator of the financial condition of a financial institution or of the safety of deposits maintained at the financial institution;

(3) deposits in the financial institution are federally insured and are not exposed to risk of loss unless the balance of the deposit account exceeds the specific amount of federal deposit insurance as determined by the type of account and the manner in which the account is structured; and

(4) withdrawal of deposits from the financial institution could cause the depositor to incur additional fees or charges and could expose the customer to risk of loss once the funds are removed from a federally insured account at the financial institution.

(e) For purposes of this Act, a person makes a statement "for commercial purposes" if the statement is made to solicit business from a depositor of a financial institution or to otherwise influence a depositor of a financial institution to place or to withdraw funds in a manner that may benefit the business of the person making the statement or that may harm the business of the financial institution that may be in competition with the person making the statement.

(720 ILCS 300/3 new)

Sec. 3. Civil penalty. In addition to any cause of action that a financial institution may have against any person for damages caused by a violation of this Act, the Division of Banking of the Illinois Department of Financial and Professional Regulation is authorized to issue cease and desist orders against any person who violates this Act and to impose a civil monetary penalty of up to $10,000 for each violation of this Act or of such cease and desist order. Each statement made in violation of this Act shall constitute a separate violation that shall be subject to such a civil monetary penalty. The person making the statement in violation of this Act shall be liable for any statement that originated from such person, even if such statement was subsequently communicated or circulated by another person without the knowledge or consent of the first person.