(a) A suspending official may base a proposed suspension order upon evidence of covered misconduct from any of the following sources:
(1) A required report submitted by a regulated entity;
(2) A referral submitted by FHFA's Office of Inspector General; or
(3) Any other source of information.
(b) Grounds for issuance. A suspending official may issue a proposed suspension order with respect to a particular person and any affiliates thereof if the suspending official determines that there is evidence that:
(1) The person or any affiliates thereof has engaged in covered misconduct, which evidence may include copies of any order or other documents documenting a conviction or administrative sanction for such conduct; and
(2) The covered misconduct is of a type that would be likely to cause significant financial or reputational harm to a regulated entity or otherwise threaten the safe and sound operation of a regulated entity.
(c) Notice required. If a suspending official determines that grounds exist under paragraph (b) of this section for issuance of a proposed suspension order with respect to a particular person and any affiliates thereof, the suspending official may issue a written notice of proposed suspension to the person and any affiliates thereof, and shall provide a copy of such notice to the regulated entity and to all of the other regulated entities.
(d) Content of notice. The notice of proposed suspension shall include:
(1) The time period during which the suspension will apply;
(2) A statement of the suspending official's proposed suspension determination and supporting grounds;
(3) The proposed suspension order;
(4) Instructions on how to respond; and
(5) The date by which any response must be received, which must be at least thirty (30) calendar days after the date on which the notice is sent.
(e) Method of sending notice. The suspending official shall send the notice of proposed suspension to the last known street address, facsimile number, or email address of:
(1) The person, the person's counsel, or an agent for service of process; and
(2) Any affiliates of the person, the counsel for those affiliates, or an agent for service of process, if suspension is also being proposed for such affiliates.
(f) Response from respondent -
(1) Timing of response. Any response from the affected person and any affiliates thereof must be submitted to FHFA within the time period specified in the notice. If a response is submitted after the specified deadline, the suspending official may consider or disregard such response, in the suspending official's discretion.
(2) Content of response. The response shall identify:
(i) Any information and argument in opposition to the proposed suspension;
(ii) Any specific facts that contradict the statements contained in the notice of proposed suspension. A general denial is insufficient to raise a genuine dispute over facts material to the suspension;
(iii) All criminal and civil proceedings not included in the notice of proposed suspension that grew out of facts relevant to the bases for the proposed suspension stated in such notice;
(iv) All existing, proposed, or prior exclusions under regulations implementing Executive Order 12549 and all similar actions taken by Federal, state, or local agencies, including administrative agreements that affect only those agencies; and
(v) The names and identifying information for any affiliates of the affected person.
(g) Response from regulated entities -
(1) Timing of response. Any response from the regulated entities must be submitted to FHFA within the time period specified in the notice. If a response is submitted after the specified deadline, the suspending official may consider or disregard such response, in the suspending official's discretion.
(2) Content of response.
(i) The response shall include:
(A) Any information that would indicate that suspension of the person in question could reasonably be expected to have a negative financial impact or other significant adverse effect on the financial or operating performance of the regulated entity; and
(B) Any existing contractual relationship with the person in question for which the regulated entity might request a limitation or qualification.
(ii) The response may include any other information that the regulated entity believes would be relevant to the proposed suspension determination, including but not limited to:
(A) Any information related to the factual basis for the proposed suspension;
(B) Any information about other known affiliates of the person;
(C) Recommendations for alternatives to suspension that could mitigate the risks presented by engaging in covered transactions with the respondent; and
(D) Recommendations for limitations or qualifications on the scope of the proposed suspension.
[78 FR 63012, Oct. 23, 2013, as amended at 80 FR 79680, Dec. 23, 2015]