Can your bank deny you of withdrawing your CD? Penalties or not?

I have never heard of such a thing unless the CD is/was serving as collateral for a loan or other obligation you have with the bank which would entitle them to it. If the bank seized it because of a default then you likely would have received notification of its realization on the CD and its application to that debt.  So, unless you pledged it as security, I am almost certain that the bank would have to give the CD to you upon your request less any penalties to which is it entitled as a result of your early withdrawal. If you are not receiving a satisfactory response from the representative denying your request to withdraw the CD, I suggest you move your way up the chain of command. For instance, speak with the branch manager, have that person call their supervisor or legal counsel, etc. Try it in writing as well and send the letter to the Bank President to be sure it gets the attention you deserve. If your efforts with the bank fail, I suggest that you contact the bank's regulator. Who that is will depend on the type of bank it is, but you could start with the Consumer Financial Protection Bureau (www.cfpb.gov) which can point you in the right direction.