Financial Services Weekly News - September 2017

by Goodwin
Contact

Goodwin

Editor's Note
 
The Roundup has been on hiatus since its August 23 edition. Since then, we have had the misfortune to witness the widespread devastation inflicted by Hurricanes Harvey and Irma. Our hearts go out to the victims of these terrible storms. Although the despair resulting from these storms is very real, we can also take pride in the response that we have seen over the past few weeks. From neighbors helping neighbors and strangers helping strangers, to the diligent efforts of first responders, to the overwhelming generosity of those donating supplies and money to the relief effort, the response to this tragedy has been nothing short of heroic. While it is important to focus on the devastation, perhaps we should also remember that we can accomplish nearly anything when we come together for the greater good.

Regulatory Developments

OMB Approves Delay of Fiduciary Rule Until July 2019

On August 28, the Office of Management and Budget (OMB) approved the Department of Labor’s (DOL) proposal of an 18-month delay of key provisions of the DOL’s Fiduciary Rule, relating to the best interest contract exemption, the class exemption for principal transactions and the prohibited transactions exemption 84-24. The OMB noted that it had completed its review of the proposal and listed its concluded action as “consistent with change,” meaning that the OMB generally agreed with the intent of the rule but made some changes. There were no further details about the OMB’s changes. The rule now goes back to the DOL, which published the proposed rule in the Federal Register on August 31, 2017, with a 15-day public comment period.

Federal Banking Agencies Seek Public Comment on Proposed Regulatory Capital Rule

On August 25, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (Agencies) published in the Federal Register a notice of proposed rulemaking (Transitions NPR) seeking public comment on a proposal that would impact certain regulatory capital rules adopted by the Agencies in 2013 (2013 Rules). Comments on the Transitions NPR must be received by September 25, 2017. The 2013 Rules strengthened the capital requirements applicable to banking organizations supervised by the Agencies, inter alia, by limiting the amount of capital issued by a consolidated subsidiary and not owned by the banking organization that counts toward regulatory capital and by limiting the amounts of mortgage servicing assets, deferred tax assets arising from temporary differences that could not be realized through net operating loss carrybacks, and certain investments in the capital of unconsolidated financial institutions that are deductible from regulatory capital. The 2013 Rules included transition provisions phasing in such capital requirements over time. In response to concerns raised about the 2013 Rules, the Agencies are evaluating simplifications to the 2013 Rules and anticipate publishing a future notice of proposed rulemaking seeking public comment on such simplifications (Simplifications NPR). While the Simplifications NPR is pending, this Transitions NPR proposes to extend for non-advanced approaches banking organizations certain 2017 transition provisions, currently in effect under the 2013 Rules, which would otherwise become fully effective on January 1, 2018, as described in the Transitions NPR. The Transitions NPR would not apply to advanced approaches banking organizations, which would continue to apply the 2013 Rules and their transition provisions.

OCC Issues Mortgage Lending Bulletin Concerning High-LTV Loans

On August 21, the Office of the Comptroller of the Currency (OCC) issued Bulletin 2017-28, providing risk management guidance to lenders offering residential mortgage loans with loan-to-value (LTV) ratios that exceed 100 percent at origination (“high-LTV loans”) in connection with community redevelopment programs. View the LenderLaw Watch blog post.

SEC Names New Director of the Division of Investment Management

On August 31, the Securities and Exchange Commission (SEC) announced that Dalia Blass, a securities attorney and former SEC staff member, has been named Director of the agency’s Division of Investment Management. The SEC’s Division of Investment Management is responsible for oversight and regulation of the nation’s multi-trillion dollar investment management industry. The Division is responsible for the SEC’s regulation of investment companies, variable insurance products, and federally registered investment advisers. Ms. Blass returns to the SEC after previously serving in a number of leadership roles in the Division of Investment Management, most recently as Assistant Chief Counsel.

Client Alert: Senior Managers and Certification Regime: Implications for Fund Managers

The UK Government and the Financial Conduct Authority (FCA) have decided to replace the existing Approved Persons Regime with a new Senior Managers and Certification Regime. This will have significant implications for all UK authorized firms. For more information, please read the client alert issued by Goodwin’s Private Investment Funds practice.

Client Alert: Mutual Funds Should Consider Accelerating Filings in Advance of Increase in SEC Registration Fee Rate

As a result of upcoming increases in securities registration fee rates applicable to mutual funds, funds with fiscal year ends of July or August and net sales should consider accelerating their annual Rule 24f-2 filings. For more information, please read the client alert issued by Goodwin’s Financial Industry and Investment Management practices.

New SEC Investor Alert Re: Initial Coin Offerings

On August 29, the SEC issued an Investor Alert warning investors about companies asserting they are engaging in an ICO, when in fact it is a scam. Specifically, “The SEC’s Office of Investor Education and Advocacy is warning investors about potential scams involving stock of companies claiming to be related to, or asserting they are engaging in, ICOs. Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include “pump-and-dump” and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.” View the Digital Currency and Blockchain Perspectives blog post.

Client Alert: NYSE Seeks to Delay Dividend Notification Change

The New York Stock Exchange (NYSE) is seeking to delay the implementation of its recently adopted dividend notification requirements until no later than February 1, 2018. For more information, read the client alert issued by Goodwin’s Public Companies and REITs and Real Estate M&A practices.

Enforcement & Litigation

CFPB Enters Consent Order with Lead Aggregator for Steering Consumers to Illegal Loans

On September 6, the Consumer Financial Protection Bureau (CFPB) announced that it had entered into a consent order with a lead aggregator over claims the aggregator steered consumers toward lenders who offered installment or payday loans that were illegal in consumers’ states. The consent order claimed that the aggregator sold loan applications to lenders who had no legal right to collect on those loans in some consumers’ states. The CFPB alleged that the sale of these loans violated Section 1031(d) and 1036(a)(1)(B) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(d)(2)(A), 5536(a)(1)(B), as the manner in which the loans were sold prevented consumers from understanding the risks, costs, or conditions of the loans they were offered. The CFPB further alleged that the aggregator “knows or has reason to believe that the Leads it sells are likely to result in loans with interest rates that exceed state usury limits or otherwise fails to comply with laws of the state where the consumer is located.” View the Enforcement Watch blog post.

Eleventh Circuit Affirms Dismissal in FCRA Class Action

On August 24, the Eleventh Circuit affirmed the Northern District of Georgia’s dismissal of a putative Fair Credit Reporting Act (FCRA) case against Equifax and Transunion. In Pedro v. Equifax, Inc., plaintiff sought to represent a putative class of authorized users of delinquent credit cards who did not have payment obligations on those credit cards but whose credit reports included information about the delinquency. The court held that dismissal was appropriate because defendants’ interpretation of the FCRA was objectively reasonable. Pedro provides important guidance for defendants facing FCRA cases as well as those examining their FCRA compliance procedures. View the LenderLaw Watch blog post.

CFPB Secures Stipulated Final Judgment Against Credit Repair Company

On August 30, the CFPB announced that it had filed a stipulated proposed final judgment in the U.S. District Court for the Central District of California in a case against a California-based credit repair company. The lawsuit, which was initially filed in September 2016, alleges that the credit repair company (1) charged illegal advance fees to consumers; (2) misled consumers about the cost and effectiveness of its service; and (3) misled consumers about its “money back guarantee.” The CFPB alleged that these practices violated sections 1031(a), 1036(a), and 1054(a) of the Consumer Financial Protection Act of 2010 (CFPA), 12 U.S.C. §§ 5531(a), 5536(a), 5564(a), and the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. §§ 6101-6108, and its implementing regulation, the Telemarketing Sales Rule (TSR), 16 C.F.R. Part 310. The credit repair company allegedly charged over 50,000 consumers a total of over $20 million for credit repair services, returning only $1.5 million in refunds. View the Enforcement Watch blog post.

D.C. AG Announces Judgment Against Student Debt Relief Provider

On August 24, the Attorney General for the District of Columbia (D.C. AG) announced that his office won a judgment in the D.C. Superior Court against a debt relief provider and its owners. The D.C. AG alleged that the defendants unlawfully marketed student debt relief services to D.C. consumers. The court found that the company misrepresented its services by suggesting that it was affiliated with the federal government and unlawfully charged upfront fees for its services. View the Enforcement Watch blog post.

Massachusetts AG Sues Student Loan Servicer

On August 23, Massachusetts Attorney General Maura Healey announced that her office had sued one of the nation’s largest federal student loan servicers, alleging that the servicer deprived public servants of relief under the Public Service Loan Forgiveness Program (PSLF), a federal student loan forgiveness program that forgives loans of borrowers that hold public service positions after making 120 qualifying monthly loan payments. The complaint was filed in Suffolk County Superior Court. View the Enforcement Watch blog post.

Putative TCPA Class Denied Certification Under Spokeo

On August 15, the Northern District of Illinois denied class certification to a proposed Telephone Consumer Protection Act (TCPA) class in Legg v. PTZ Insurance Agency Ltd., No. 14 C 10043. The court held that, because some of the named plaintiffs consented to receive communications from the defendants, they could not show concrete injury under Spokeo. The court denied class certification because the question about whether class members consented to receive communications was too individualized to decide at the class level. Legg has strategic implications about how Spokeo can be used to defeat certification in other TCPA putative class actions. View the LenderLaw Watch blog post.

SEC’s Phone Call to Protostarr Shuts Down Its ICO

Protostarr, a blockchain-based startup, has shut down its decentralized application and refunded its initial coin offering (ICO) participants following a request for information from the SEC. According to the company, on August 24, the SEC contacted Protostarr and asked the company to “volunteer a bunch of information” in relation to their recent ICO that raised $47,000 last month. In response to the SEC’s contact, Protostarr announced that “[a]fter consultation with multiple lawyers, we have decided to cease further operations and refund Ethereum collected in our crowdsale.” This appears to be the first known “action” by the SEC following the release of its investigational report into The DAO, issued on July 25, 2017, along with the SEC’s guidance on token sales. In the report, the SEC concluded that the DAO’s tokens were of a character as to fall under the definition of a security under current law.  The SEC’s action against Protostarr seems consistent with its July 25, 2017, guidance. View the Digital Currency and Blockchain Perspectives blog post.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Goodwin | Attorney Advertising

Written by:

Goodwin
Contact
more
less

Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.