Senate Bill No. 442
(By Senators Ross, Bowman, Dittmar,
Kessler, Snyder, White, Deem, Kimble, Wooton, Helmick, Sharpe,
Hunter, Jackson, Oliverio, McKenzie, Sprouse, Ball, Anderson,
Schoonover, Dugan and Plymale)
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[Introduced February 9, 1998; referred to the Committee on
Banking and Insurance; and then to the
Committee on the Judiciary.]
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A BILL to amend chapter thirty-one-a of the code of West Virginia,
one thousand nine hundred thirty-one, as amended, by adding
thereto a new article, designated article two-a; and to amend
article four of said chapter by adding thereto a new section,
designated section ten-a, all relating to limiting access to
certain records of financial institutions; providing for the
access of certain governmental entities to financial records;
defining terms; establishing requirements for government
access to records; permitting access upon written
authorization of a customer; requiring state entity to certify
compliance; enumerating exceptions; establishing subpoena and
notice requirements; setting forth procedures when subpoena issued by grand jury; providing for civil and criminal
liability and penalties; establishing the statute of
limitations and the tolling thereof; authorizing injunctive
relief; providing for the exclusiveness of remedies; and
limiting stockholder inspection of books and records of state
banking institutions.
Be it enacted by the Legislature of West Virginia:
That chapter thirty-one-a of the code of West Virginia, one
thousand nine hundred thirty-one, as amended, be amended by adding
thereto a new article, designated article two-a; and that article
four of said chapter be amended by adding thereto a new section,
designated section ten-a, all to read as follows:
ARTICLE 2A. GOVERNMENTAL ACCESS TO FINANCIAL RECORDS.
§31A-2A-1. Definitions.
As used in this article:
(a) "Customer" means any person who has transacted business
with or has used the services of a financial institution or for
whom a financial institution has acted as a fiduciary, in relation
to an account maintained in such person's name;
(b) "Financial institution" mean a bank, savings and loan
association, a trust company or a credit union chartered pursuant
to any state or federal law;
(c) "Financial record" means any original, copy or information
from any record or document held by a financial institution pertaining to a customer of the financial institution, including
any record of a transaction conducted by means of a customer bank
communication terminal or other electronic device;
(d) "Investigation" includes, but is not limited to, any
inquiry by a state or local law enforcement officer, sheriff or
prosecuting attorney, or any inquiry made by a state or local
governmental entity for the purpose of determining whether there
has been a violation of any law enforceable by imprisonment, fine
or other monetary liability;
(e) "Person" means an individual, partnership, corporation,
limited liability company, association, trust or any other legal
entity;
(f) "State entity" means any state or local governmental
office, officer, department, division, bureau, board or commission,
including the Legislature, and any other state or local government
agency of West Virginia, its political subdivisions and any agent
thereof; and
(g) "Subpoena" includes a subpoena duces tecum or any other
lawful subpoena to compel testimony or the disclosure or production
of documents.
§31A-2A-2. Requirements for government access to records.
(a) No state entity may have access to or obtain from a
financial institution financial records or copies of the
information contained in the financial records of any customer except as set forth in section four of this article or under the
following circumstances:
(1) The customer has executed a written authorization pursuant
to section three of this article;
(2) The financial records are disclosed in response to a
judicial order, warrant, summons or subpoena issued by a court of
competent jurisdiction or a valid administrative order or subpoena
of a state entity expressly ordering or requiring the release of
the financial records:
Provided, That any subpoena issued pursuant
to the provisions of this subsection shall comply with the
provisions of section five of this article;
(3) The financial records are disclosed in response to a
judicial order authorizing the appointment of the state entity or
its agent as the person to whom the records are released as
guardian of the property or customer, or as administrator or
executor of said customer's estate;
(4) The financial records are disclosed pursuant to a state or
federal rule of civil or criminal procedure or any comparable rule
of another court of competent jurisdiction, or provided in response
to a subpoena issued in connection with any pending civil or
criminal proceeding to which the state entity and the customer are
parties, or in response to interrogatories in aid of execution
propounded by a state entity where it is a judgment creditor of the
customer;
(5) To law enforcement officers presenting a grand jury or
trial subpoena resulting from a criminal investigation:
Provided,
That any financial records obtained in response to a grand jury
subpoena issued hereunder shall be subject to the restrictions set
forth in section six of this article; or
(6) As may be required by any state or federal law.
(b) No state entity shall provide any financial record
obtained pursuant to the provisions of this article to any other
state entity unless the other state entity has independently
obtained or otherwise has authorization to receive the financial
record in accordance with the provisions of this article.
§31A-2A-3. Written authorization of customer; contents;
certification of compliance.
(a) A customer may authorize disclosure under section two of
this article by signing and dating a statement in which he or she:
(1) Authorizes the disclosure for such period as may be agreed
upon;
(2) Indicates an understanding of his or her right to revoke
such authorization at any time before the financial records are
disclosed;
(3) Identifies the financial records which are authorized to
be disclosed;
(4) Specifies the purposes for which, and the state entity to
which, such records may be disclosed; and
(5) Is advised of his or her rights under this article.
(b) No authorization as provided in subsection (a) of this
section shall be required as a condition of doing business with any
financial institution.
(c) No financial institution shall release the financial
records of a customer pursuant to his or her authorization under
this section until the state entity seeking the records also
provides certification in writing to the financial institution that
it has complied with the applicable provisions of this article.
The written authorization shall be provided to and retained by the
financial institution and the state entity seeking to obtain the
disclosure.
§31A-2A-4. Exceptions.
(a) Nothing in this article is intended to, or shall prohibit,
apply to or interfere with:
(1) The lawful authority or ability of the commissioner of
banking or any other state or federal regulatory agency of a
financial institution from obtaining any records which may be
deemed, in their discretion, appropriate for the examination and
regulation of the financial institution;
(2) The lawful authority or ability of the commissioner of
insurance or the state auditor from obtaining any records from a
financial institution relating to the sale of insurance or
securities;
(3) The publication of information derived from financial
records if the information cannot be identified to any particular
customer, deposit or account, or if the information is in composite
form and is not marked or intended to be identified to any
particular customer, deposit or account;
(4) The making of reports or returns specifically required or
permitted by federal or state law, including applicable tax law or
regulations;
(5) The disclosure of any information under the provisions of
the uniform commercial code governing the dishonor of a negotiable
instrument, or the disclosure to any purported state entity payee
or to any purported state entity holder of a check, draft, order or
other item, whether or not such instrument has been accepted by
such payee or holder as payment, as to whether or not such
instrument would be honored if presented at the time of such
disclosure;
(6) A state entity obtaining a credit report or consumer
credit report from anyone other than a financial institution;
(7) The exchange, in the regular course of business, of
information showing the outstanding balance of a mortgage loan
account in connection with a sale, refinancing or foreclosure of
real property in a transaction to which the state entity is a
party; or the disclosure, in the regular course of business, of
information on a mortgage or deed of trust on a subject property to a state entity as holder of any subordinate mortgage, deed of trust
or security interest;
(8) The disclosure to the department of health and human
resources, upon written request, of an individual's financial
records which the department determines are necessary to verify or
confirm the individual's eligibility or ineligibility for public
assistance;
(9) The disclosure of an individual's financial records in
response to a written request by the department of health and human
resources, as authorized by the federal parent locator service of
the United States department of health and human services;
(10) The examination or audit of financial records relating to
preneed funeral trust accounts pursuant to article fourteen,
chapter forty-seven of this code;
(11) The disclosure of financial records relating to unclaimed
property pursuant to article eight, chapter thirty-six of this
code, including the examination of financial records by the state
treasurer or his or her agent(s) to determine compliance with the
handling and reporting of unclaimed property as provided by, and
subject to, the limitations set forth in section twenty of said
article;
(12) The presentation to appropriate local, state or federal
law enforcement authorities of a certificate under oath by an
authorized representative of a financial institution drawee that declares the dishonor of the check, draft or order by the drawee,
the lack of an account with the drawee at the time of utterance or
the insufficiency of the drawer's funds at the time of presentation
and utterance in connection with any criminal action for obtaining
property or services by a worthless check, draft or order;
(13) The disclosure of information to appropriate local, state
or federal law enforcement authorities or regulatory agencies upon
the discovery of a suspected violation of criminal law, or as may
be required by state or federal law or rule;
(14) The disclosure of information or records by a financial
institution to any court or other appropriate state entity, as an
incident to recording a lien, perfecting a security interest,
proving a claim in bankruptcy or otherwise collecting on a debt
owing either to the financial institution itself or in its role as
a fiduciary;
(15) The disclosure of information or records by a financial
institution, as an incident to processing an application for
assistance to a customer in the form of a government loan, loan
guaranty, or loan insurance agreement, or as an incident to
processing a default on, or administering, a government guaranteed
or insured loan or from initiating contact with an appropriate
state entity for the purpose of providing any financial record
necessary to permit such authority to carry out its
responsibilities under a loan, loan guaranty or loan insurance agreement;
(16) The disclosure of information incidental to a transaction
in the normal course of business of the financial institution where
there is no reasonable cause to believe that the information is
intended to be used by the state entity in connection with an
investigation of the customer; or
(17) The preparation, review, handling or maintenance of
financial records in the ordinary course of business by any
officer, employee or agent of a financial institution having
custody of the records.
(b) Nothing in this article shall preclude a state entity from
obtaining information that is public record without regard to this
article although the information may have been derived from a
financial institution.
(c) Nothing in this article shall preclude a state entity from
obtaining information or financial records voluntarily submitted to
it by others in an attempt to seek governmental assistance or
redress of a grievance, including legislative change:
Provided,
That the financial record or information was not solicited by the
state entity in an effort to evade the requirements of this article
or submitted by a financial institution in contravention of section
seven of this article.
§31A-2A-5. Subpoena and notice requirements.
(a) A financial institution may disclose or produce financial records or information derived from financial records to a state
entity in compliance with a subpoena served upon it if:
(1) The subpoena contains a certification that a copy of the
subpoena has been served on the person whose records are sought by
the state entity seeking disclosure or production of the records at
least ten days prior to the date on which disclosure or production
is sought; or
(2) The subpoena contains a certification that service has
been waived by the court, administrative tribunal or lawful issuing
state entity, as the case might be, for good cause.
(b) Any person whose financial records are sought pursuant to
a subpoena issued under the provisions of subdivision (1),
subsection (a) of this section may challenge the subpoena by filing
a motion to quash in a court of competent jurisdiction within the
ten day notice period provided in such subdivision. After the
filing and service of the motion upon the financial institution and
the person or state entity issuing the subpoena, the records shall
not be released, without liability to the financial institution,
until the court holds a hearing on the motion and an order is
entered sustaining, modifying or quashing the subpoena.
§31A-2A-6. Subpoena issued by grand jury.
In addition to the requirements of section five of this
article, financial records relating to a customer obtained from a
financial institution pursuant to a subpoena issued under the authority of a grand jury:
(1) Shall be returned and actually presented to the grand
jury;
(2) Shall be used only for the purpose of considering whether
to issue an indictment or presentment by that grand jury, or of
prosecuting a crime for which that indictment or presentment is
issued, or for a purpose authorized by applicable West Virginia
rules of criminal procedure;
(3) Shall be destroyed or returned to the financial
institution if not used for one of the purposes specified in
subdivision (2) of this section; and
(4) Shall not be maintained, or a description of the contents
of such records shall not be maintained by any governmental
authority other than in the sealed records of the grand jury,
unless such record has been used in the prosecution of a crime for
which the grand jury issued an indictment or presentment or for a
purpose authorized by applicable West Virginia rules of criminal
procedure.
§31A-2A-7. Penalties.
(a) Any state, county or local government official or employee
who knowingly and willfully discloses financial records with intent
to violate this article, or who knowingly and willfully induces or
attempts to induce an officer, employee, agent, or director of a
financial institution to disclose financial records to a state entity with intent to violate this article is guilty of a
misdemeanor and, upon conviction thereof, may be fined not more
than one thousand dollars.
(b) Any financial institution which negligently discloses
financial records or the information contained therein, and any
state entity which negligently obtains or discloses financial
records or the information contained therein, in violation of this
article, shall be liable to the customer in an amount equal to the
sum of:
(1) Up to one thousand dollars in civil damages, as penalty,
without regard to the volume of records involved or lack of actual
damages;
(2) Any actual damages sustained by the customer as a result
of the disclosure; and
(3) The costs of the action, including reasonable attorney's
fees, as may be allowed by the court.
(c) No financial institution or person shall be held liable,
notwithstanding subsection (a) or (b) of this section, for
disclosure of financial records pursuant to a subpoena, summons,
warrant, court order or administrative order which on its face
appears to have been issued upon lawful authority. No financial
institution or agent or employee thereof who discloses financial
records pursuant to this article in good-faith reliance upon either
a certificate by any state entity that this article has been complied with, or pursuant to the provisions of subsection
thirteen, section four of this article, shall be liable under this
article or any other law or regulation of this state or any
political subdivision hereof.
§31A-2A-8. Statute of limitations; tolling of statute.
(a) An action to enforce any provision of this article may be
brought in any circuit court of competent jurisdiction in this
state within three years from the date on which the violation
occurs or the date of discovery of such violation, whichever is
later.
(b) If any person files a motion or application under this
article which has the effect of delaying the access of a state
entity to financial records pertaining to such person, any
applicable statute of limitations shall be tolled for the period
extending from the date such motion or application was filed until
the date an order is entered pursuant thereto.
§31A-2A-9. Injunctive relief; recovery of attorney fees.
In addition to any other remedy contained in this article,
injunctive relief shall be available to require compliance with any
procedure established in this article. Any party awarded
injunctive relief pursuant to this section may recover costs and
reasonable attorney's fees as determined by the court.
§31A-2A-10. Exclusive remedies.
The remedies provided in this article are exclusive for any violations or alleged violations of this article.
ARTICLE 4. BANKING INSTITUTIONS AND SERVICES GENERALLY.
§31A-4-10a. Stockholder inspection of books and records.
(a) Any stockholder or group of stockholders of a state
banking institution, holding of record the number of voting shares
of such bank specified below, upon making written demand stating a
proper purpose, shall have the right to examine, in person or by
agent or attorney, at any reasonable time or times, nonconfidential
portions of its books and records of account, minutes and record of
stockholders and to make extracts therefrom. Such right of
examination is limited to a stockholder or group of stockholders
holding of record:
(1) Voting shares having a cost of not less than one hundred
thousand dollars or constituting not less than one percent of the
total outstanding voting shares:
Provided, That such stockholder
or group of stockholders have held of record such voting shares for
a period of at least six months before making such written demand;
or
(2) Not less than five percent of the total outstanding voting
shares.
(b) Except as provided in this subsection (a) of this section
and in section ten of this article with respect to inspection of a
list of stockholders, no stockholder or group of stockholders of a
state banking institution shall have any other right under this section or common law to examine its books and records of account,
minutes and record of stockholders.
(c) The right to examination authorized by subsection (a) of
this section and any right to inspect the list of stockholders
provided by a bank's bylaws in a manner greater than that
authorized under section ten of this article may be denied to any
stockholder or group of stockholders upon the refusal of any such
stockholder or group of stockholders to furnish such institution,
its transfer agent or registrar an affidavit that such examination
or inspection is not desired for any purpose which is in the
interest of a business or object other than the business of the
institution, that such stockholder has not within the five years
preceding the date of the affidavit sold or offered for sale, and
does not now intend to sell or offer for sale, any list of
stockholders of the bank or of any other bank or bank holding
company, and that such stockholder has not within said five-year
period aided or abetted any other person in procuring any list of
stockholders for purposes of selling or offering such list for
sale.
(d) Notwithstanding any provision of this section or any
common law, no stockholder or group of stockholders shall have the
right to obtain, inspect or copy any portion of any books or
records of a state banking institution containing:
(1) A list of depositors in, borrowers from or customers of such banking institution;
(2) The addresses of the banking institution's depositors,
borrowers or customers;
(3) Individual deposit or loan balances or records of the
banking institution's depositors, borrowers or customers; or
(4) Any data from which such information could be reasonably
constructed.
(e) For purposes of this section the term "confidential
record" includes, but is not limited to:
(1) Any document or information relating to a non-public
market strategy or plan of the bank;
(2) Any document or information relating to matters declared
confidential under state or federal law, including, but not limited
to bank regulatory reports;
(3) Any document or information relating to a proposed merger,
acquisition or sale of assets which has not yet been disclosed to
the public by the bank, including any document or information which
constitutes inside information for purposes of state or federal
securities law; and
(4) Any document or information deemed by the bank as
proprietary relating to the loan policy established by the bank.
NOTE: The purpose of this bill is to establish limitations on
access to records of financial institutions. The bill limits
state and local government access to financial records and
establishes privacy rights of customers of financial institutions. The bill also establishes limits on stockholder examination of the
books and records of banking institutions.
This article is new; therefore, strike-throughs and
underscoring have been omitted.)
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