ENROLLED
COMMITTEE SUBSTITUTE
FOR
Senate Bill No. 442
(Senators Ross, Bowman, Dittmar, Kessler, Snyder,
White, Deem, Kimble, Wooton, Helmick, Sharpe,
Hunter, Jackson, Oliverio, McKenzie, Sprouse, Ball,
Anderson, Schoonover, Dugan and Plymale, original sponsors)
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[Passed March 14, 1998; in effect ninety days from passage.]
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AN ACT 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; to amend
article four of said chapter by adding thereto a new section,
designated section ten-a; and to amend article five, chapter
thirty-one-c of said code by adding thereto a new section,
designated section eleven, all relating generally 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; limiting
stockholder inspection of books and records of state banking
institutions; and limiting the inspection of books and records
by credit union members.
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; that article four
of said chapter be amended by adding thereto a new section,
designated section ten-a; and that article five, chapter thirty- one-c of said code be amended by adding thereto a new section,
designated section eleven, all to read as follows:
CHAPTER 31A. BANKS AND BANKING.
ARTICLE 2A. MAXWELL GOVERNMENTAL ACCESS TO FINANCIAL RECORDS ACT.
§31A-2A-1. Definitions.
As used in this article:
(a) "Customer" means any person or his or her duly authorized
representative 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" means a bank, a savings and loan
association, a trust company or a credit union chartered pursuant
to any state or federal law;
(c) "Financial record" means the original or a copy of 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. "Financial record" also means
any information derived from such records or documents;
(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 which is punishable by imprisonment
or by a 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 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 disclosure of
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: (A) As guardian of the customer or conservator of his
or her property; or (B) as administrator or executor of the
customer's estate;
(4) The financial records are disclosed: (A) Pursuant to a state or federal rule of civil or criminal procedure or any
comparable rule of another court of competent jurisdiction; (B) in
response to a subpoena issued in connection with any pending civil
or criminal proceeding in which a state entity is a party; or (C)
in response to interrogatories in aid of execution propounded by a
state entity where it is a judgment creditor of the customer;
(5) The financial records are disclosed to law-enforcement
officers pursuant to a grand jury or trial subpoena resulting from
a criminal investigation which complies with the provisions of
section six of this article; or
(6) As may be required or permitted by any other state or
federal law.
(b) No state entity obtaining financial records pursuant to
the provisions of this article and no person who obtains financial
records from a state entity which obtained such financial records
pursuant to the provisions of this article shall disclose such
financial records: (i) To any other state entity unless such other
state entity has authority or authorization to receive the
financial record in accordance with the provisions of this article;
or (ii) to any person unless such person has authority or
authorization to receive the financial record:
Provided, That
nothing herein shall limit or prevent the disclosure of financial
records which are otherwise public documents or matters of public
record or the disclosure of financial records made to facilitate a lawful proceeding, investigation, examination or inspection by a
state entity. Financial records obtained under this article by a
state entity shall not be subject to disclosure under the
provisions of article one, chapter twenty-nine-b of this code.
§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) Acknowledges that he or she has been advised of his or her
rights under this article by the state entity seeking the
disclosure of the financial records.
(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 financial institution and the state entity seeking to obtain
the disclosure of the financial records shall retain copies of this
written authorization.
§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 bank,
savings and loan association, trust company or credit union to
obtain or to share between such regulatory agencies any records
which the commissioner of banking or such state or federal
regulatory agency may deem 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 to obtain any records from a
financial institution relating to the financial institution's sale
of insurance or securities;
(3) The dissemination or 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 disseminated or published in a way
which identifies 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 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 notification to appropriate local, state or federal
law-enforcement authorities or regulatory agencies that the
financial institution, its officers, employees or agents thereof
have information which may be relevant to a possible violation of
any statute or regulation. The disclosure of any information
pursuant to this subdivision may only include the name or other
identifying information concerning any individual, corporation or
account involved in and the nature of any suspected illegal
activity;
(14) The disclosure of information or records by a financial
institution to any court or other appropriate state entity which is
incidental 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 which is incidental to processing an application for
assistance to a customer in the form of a government loan, loan
guaranty, or loan insurance agreement, or which is incidental to
processing a default on, or administering, a government guaranteed
or insured loan or to 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;
(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; or
(18) The disclosure to appropriate law-enforcement officials
of the financial records of any officer, director, employee or
controlling shareholder of a financial institution by a financial
institution or by any state or federal regulatory agency having
authority to regulate the financial institution, if there is reason
to believe that the financial record is relevant to a possible
violation by such person of any law relating to a crime against the
financial institution or any such state or federal regulatory
agency. No state or federal regulatory agency which discloses any
information pursuant to this subdivision shall be deemed to have
waived any privilege applicable to that record under law.
(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
financial records.
(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 to a state entity in compliance with a subpoena served upon
it if the subpoena contains a certification that: (1) A copy of
the subpoena has been served on the customer 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) that service on the customer has been
waived for good cause by the circuit court of Kanawha County or
other circuit court of competent jurisdiction.
(b) Any person whose financial records are to be disclosed
pursuant to a subpoena served 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 at any time prior to the disclosure of the records. After the filing
and service of the motion upon the financial institution and the
state entity requesting the issuance of the subpoena, the
production of financial records shall be stayed, 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.
(a) In addition to the requirements of section five of this
article, financial records obtained 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: (A) For the purpose of considering
whether to issue an indictment or presentment by that grand jury;
(B) for the purpose of prosecuting a crime for which that
indictment or presentment is issued; or (C) for any other purpose
authorized by the West Virginia rules of criminal procedure; and
(3) Shall be destroyed or returned to the financial
institution if not used for one of the purposes specified in
subdivision (2) of this subsection.
(b) Financial records obtained pursuant to a subpoena issued
under the authority of a grand jury and any descriptions of the
contents of such financial records must be maintained in sealed records of the grand jury unless such financial records or
descriptions thereof have been used in the prosecution of a crime
for which the grand jury issued an indictment or presentment or for
any other purpose authorized by the 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, shall be fined not more
than one thousand dollars.
(b) Any customer whose financial records or the information
contained therein has been negligently disclosed by a state entity
or a financial institution in violation of this article may file an
action in any circuit court of this state against the state entity
or financial institution and, if the customer proves that the state
entity or financial institution negligently disclosed the
customer's financial records or the information contained therein,
may recover from the state entity or financial institution 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 the
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: (i) In good faith reliance upon
a certificate by any state entity that this article has been
complied with; or (ii) pursuant to the provisions of subdivision
(13), subsection (a), section four of this article shall be liable
under this article or any other law or rule 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 customer 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 customer, 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 customer 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 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 to an extent 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 a confidential record
includes, but is not limited to:
(1) Any document or information relating to a nonpublic 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.
CHAPTER 31C. CREDIT UNIONS.
ARTICLE 5. DIRECTION OF CREDIT UNION AFFAIRS.
§31C-5-11. Inspection of books and records by members.
(a) Each credit union shall keep at its principal office in
this state a record of the names and addresses of its members
entitled to vote. A credit union shall keep correct and complete
books and records of account and shall keep minutes of the
proceedings of its members, board of directors and committees
having any of the authority of the board of directors. Any member
or group of members of a credit union, upon making a 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 records of members and to make extracts therefrom.
(b) The right to examination authorized by subsection (a) of
this section and any right to inspect the list of members provided
by a credit union's bylaws to an extent greater than that provided
by this section may be denied to any member or group of members
upon the refusal of any such member or group of members to furnish
the credit union with 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 credit
union.
(c) Notwithstanding any provision of this section or common
law, no member or group of members shall have the right to obtain,
inspect or copy any portion of any books or records of a credit
union containing:
(1) Individual deposit or loan balances or records regarding
other credit union members or information respecting their personal
affairs; or
(2) Any data from which such information could be reasonably
constructed.
(d) For purposes of this section, a confidential record
includes, but is not limited to, the following:
(1) Any document or information relating to a nonpublic market
strategy or plan of the credit union;
(2) Any document or information relating to matters declared confidential under state or federal law, including, but not limited
to, credit union regulatory reports; and
(3) Any document or information deemed by the credit union as
proprietary relating to the loan policy established by the credit
union.
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