Connecticut General Statutes 38a-140 – Remedial and penal provisions
(a)(1) Whenever it appears to the commissioner that any insurance company or any director, officer, employee or agent thereof has committed or is about to commit a violation of sections 38a-129 to 38a-140, inclusive, or of any regulation or order issued by the commissioner hereunder, the commissioner may apply to the superior court or any judge thereof for the judicial district in which the principal office of the insurance company is located or, if such insurance company has no such office in this state, to the superior court or any judge thereof for the judicial district of Hartford, for an order enjoining such insurance company or such director, officer, employee or agent thereof from violating or continuing to violate said sections or any such regulation or order, and for such other equitable relief as the nature of the case and the interests of the insurance company’s policyholders, creditors and securityholders or the public may require.
Attorney's Note
Under the Connecticut General Statutes, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| Class D felony | up to 5 years | up to $5,000 |
Terms Used In Connecticut General Statutes 38a-140
- Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
- Civil forfeiture: The loss of ownership of property used to conduct illegal activity.
- Commissioner: means the Insurance Commissioner. See Connecticut General Statutes 38a-1
- Contract: A legal written agreement that becomes binding when signed.
- Conviction: A judgement of guilt against a criminal defendant.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Fraud: Intentional deception resulting in injury to another.
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- Insurance: means any agreement to pay a sum of money, provide services or any other thing of value on the happening of a particular event or contingency or to provide indemnity for loss in respect to a specified subject by specified perils in return for a consideration. See Connecticut General Statutes 38a-1
- insurance company: includes any person or combination of persons doing any kind or form of insurance business other than a fraternal benefit society, and shall include a receiver of any insurer when the context reasonably permits. See Connecticut General Statutes 38a-1
- Person: means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a business trust, an unincorporated organization or other legal entity. See Connecticut General Statutes 38a-1
- Quorum: The number of legislators that must be present to do business.
- Sequester: To separate. Sometimes juries are sequestered from outside influences during their deliberations.
- State: means any state, district, or territory of the United States. See Connecticut General Statutes 38a-1
(2) No security that is the subject of any agreement or arrangement regarding acquisition, or that is acquired or to be acquired, in contravention of the provisions of sections 38a-129 to 38a-140, inclusive, or of any regulation or order issued by the commissioner hereunder may be voted at any shareholders’ meeting, or may be counted for quorum purposes, and any action of shareholders requiring the affirmative vote of a percentage of shares may be taken as though such securities were not issued and outstanding; but no action taken at any such meeting shall be invalidated by the voting of such securities, unless the action would materially affect control of the insurer or unless the courts of this state have so ordered. If an insurer or the commissioner has reason to believe that any security of the insurer has been or is about to be acquired in contravention of the provisions of sections 38a-129 to 38a-140, inclusive, or of any regulation or order issued by the commissioner hereunder, the insurer or the commissioner may apply to the superior court or any judge thereof for the judicial district of Hartford, to enjoin any offer, request, invitation, agreement or acquisition made in contravention of sections 38a-129 to 38a-140, inclusive, or any regulation or order issued by the commissioner thereunder to enjoin the voting of any security so acquired, to void any vote of such security already cast at any meeting of shareholders and for such other equitable relief as the nature of the case and the interest of the insurer’s policyholders, creditors and shareholders or the public may require.
(3) In any case where a person has acquired or is proposing to acquire any voting securities in violation of sections 38a-129 to 38a-140, inclusive, or any regulation or order issued by the commissioner hereunder, the superior court for the judicial district of Hartford, on notice as the court deems appropriate, upon application of the insurer or the commissioner, may seize or sequester any voting securities of the insurer owned directly or indirectly by the person, and issue the order with respect thereto as may be appropriate to effectuate the purposes of sections 38a-129 to 38a-140, inclusive.
(4) Notwithstanding any other provisions of law, for the purposes of sections 38a-129 to 38a-140, inclusive, the situs of the ownership of the securities of domestic insurers shall be deemed to be in this state.
(b) Whenever it appears to the commissioner that any person has committed a violation of sections 38a-129 to 38a-140, inclusive, that so impairs the financial condition of a domestic insurance company as to threaten insolvency or make the further transaction of business by it hazardous to its policyholders, creditors, securityholders or the public, the commissioner may proceed as provided in chapter 704c to take possession of the property of such domestic insurance company and to conduct the business thereof.
(c) (1) Whenever it appears to the commissioner that any insurance company or any director, officer, employee or agent thereof has committed a wilful violation of sections 38a-129 to 38a-140, inclusive, the commissioner may cause criminal proceedings to be instituted by the state’s attorney for the judicial district in which the principal office of the insurance company is located or, if such insurance company has no such office in the state, by the state’s attorney for the judicial district of Hartford against such insurance company or the responsible director, officer, employee or agent thereof. Any insurance company that wilfully violates said sections shall be fined not more than fifty thousand dollars. Any individual who wilfully violates said sections shall be fined not more than fifteen thousand dollars or, if such wilful violation involves the deliberate perpetration of a fraud upon the commissioner, shall be imprisoned not more than two years or so fined, or both.
(2) Any officer, director or employee of an insurance holding company system who wilfully and knowingly subscribes to or makes or causes to be made any false statement or false report or false filing with the intent to deceive the commissioner in the performance of the commissioner’s duties under sections 38a-129 to 38a-140, inclusive, upon conviction thereof, shall be guilty of a class D felony, except that such officer, director or employee shall be fined not more than fifty thousand dollars. Any fines imposed shall be paid by the officer, director or employee in his or her individual capacity.
(d) (1) Whenever it appears to the commissioner that any person has committed a violation of sections 38a-129 to 38a-140, inclusive, that makes the continued operation of an insurance company contrary to the interests of its policyholders or the public, the commissioner may, after giving notice and an opportunity to be heard, suspend, revoke or refuse to renew such insurance company’s license or authority to do business in this state for such period as the commissioner finds is required for the protection of its policyholders or the public.
(2) Whenever it appears to the commissioner that any person has committed a violation of sections 38a-129 to 38a-140, inclusive, that prevents the full understanding of the enterprise risk posed by an insurer’s insurance holding company system or an insurer’s affiliate to such insurer, the commissioner may disapprove dividends and other distributions and place such insurer under administrative supervision in accordance with sections 38a-962 to 38a-962j, inclusive.
(e) Any insurance company failing, without just cause, to file any registration statement as required in section 38a-135 shall be fined, after notice and hearing, one hundred fifty dollars for each day’s delay, to be paid into the Insurance Fund established under section 38a-52a. The maximum penalty under this section shall be fifteen thousand dollars. The commissioner may reduce the penalty if the insurance company demonstrates to the commissioner that the imposition of the penalty would constitute a hardship to the insurance company.
(f) Each director or officer of any insurance holding company system who wilfully and knowingly violates, participates in, or assents to, or who wilfully and knowingly permits any of the officers or agents of the insurance company to engage in transactions or make investments that have not been properly reported or submitted pursuant to section 38a-135 or 38a-136, or that violate sections 38a-129 to 38a-140, inclusive, shall pay, in their individual capacity, a civil forfeiture of not more than seven thousand five hundred dollars per violation, after notice and hearing before the commissioner. Any civil forfeiture so recovered shall be paid into the Insurance Fund as established under section 38a-52a. In determining the amount of the civil forfeiture, the commissioner shall take into account the appropriateness of the forfeiture with respect to the gravity of the violation, the history of previous violations, and such other matters as the commissioner deems necessary.
(g) Whenever it appears to the commissioner that any insurance company subject to sections 38a-129 to 38a-140, inclusive, or any director, officer, employee or agent thereof has engaged in any transaction or entered into a contract that is subject to section 38a-136 and that would not have been approved had such approval been requested, the commissioner may order the insurance company to cease and desist immediately any further activity under such transaction or contract. After notice and hearing, the commissioner may also order the insurance company to void any such contracts and restore the status quo if such action is in the best interests of the policyholders, creditors or the public.
(h) If any person required to file an information statement under subsection (b) of section 38a-130 or any required amendment thereto has (1) failed to do so within the prescribed time, (2) files a false or misleading information statement or amendment thereto, (3) obstructed the conduct of any hearing required by the commissioner, or (4) consummated a change of control of the domestic insurance company in the absence of a determination by the commissioner that such change of control would not be prejudicial to the interest of its policyholders, the commissioner and any interested party, including the domestic insurance company, may apply to the superior court for the judicial district of Hartford or to the superior court for the judicial district in which the domestic insurance company has its principal place of business, or to any judge thereof, for any injunctive or other relief necessary to remedy any such act or failure to act. Such relief may include an injunction prohibiting any consummation of the change of control until such act or failure to act is remedied. In addition, the commissioner may proceed under section 38a-912 for an order permitting the commissioner to take possession and control of the property and affairs of the domestic insurance company in accordance with the provisions of said section 38a-912.