Financial Services Weekly News - July 2016 #4

by Goodwin
Contact

Goodwin

Editor's Note
What Exactly Is Bitcoin? In a case featuring a sting operation beginning with meetings in a coffee shop, ice cream store and hotel lobby and ending with the sale of bitcoins to an undercover Miami Beach police detective for $30,000 in cash, a Florida circuit court judge dismissed criminal money transmitter and money laundering charges against a defendant on the grounds that bitcoin is not money. Despite facts parodying a Miami Vice episode, the judge’s opinion, which is discussed in more detail below, raises important issues about how virtual currencies fit into the current legal and regulatory landscape. In this instance, the judge took the position that, because the Florida statutes governing money services business and money laundering did not clearly cover the sale of virtual currency, the Florida legislature “must choose to adopt statutes regulating virtual currencies” before the state could criminalize such activities. Whether or not you agree with the judge’s opinion, fitting bitcoin into the existing legal and regulatory regime promises to continue to be a difficult proposition and courts are likely to have much more to say on the issue.

Regulatory Developments

FINRA Publishes Notice Warning Member Firms to Avoid Improper Forum Selection Provisions

On July 22, FINRA published Regulatory Notice 16-25, reminding member firms that customers have a right under FINRA Rule 12200 to request arbitration at FINRA’s arbitration forum at any time and do not forfeit that right by signing an agreement with a contradictory forum selection provision. FINRA is aware that federal appellate courts have held that such forum selection clauses supersede the requirements of the FINRA Rule, but maintains that “FINRA rules are not mere contracts that member firms and associated persons can modify.” If a member firm is using a forum selection provision in a customer agreement that includes forums other than FINRA’s arbitration forum, FINRA recommends that the member firm use a non-exclusive forum selection provision and include the following language in the provision: “This agreement does not prohibit or restrict you from requesting arbitration of a dispute in the FINRA arbitration forum as specified in FINRA rules.” A member firm’s failure to comply may subject the firm to disciplinary action by FINRA.

FinCEN Issues Frequently Asked Questions Regarding Customer Due Diligence Rule

On July 19, the Financial Crimes Enforcement Network (FinCEN) issued Frequently Asked Questions (FAQs) to help covered financial institutions understand the scope of the Customer Due Diligence Requirements for Financial Institutions (the CDD Rule). The FAQs provide interpretive guidance with respect to the CDD Rule. FinCEN intends to issue additional guidance as appropriate.

CFPB Extends Comment Deadline on Small-Dollar Credit Proposal

The Consumer Financial Protection Bureau (CFPB) has extended the comment deadline on its small-dollar lending proposal to October 7, 2016. As discussed in the June 8 edition of the Roundup, the proposed rule is designed to limit payday loans, auto title loans, deposit advance products, and certain high-cost installment and open-end loans by requiring lenders to take steps to make sure consumers have the ability to repay their loans.

CFPB Offers Resources on HMDA Final Rule

The CFPB updated its website last week to include free resources intended to aid compliance with the new final HMDA rule. The resources include a webinar providing an overview of the rule; reference tools for data collection, recording and reporting (including a sample data collection form); institutional coverage charts; a compliance guide; and an executive summary with key compliance dates.

FRB Aligns Policy on Payment System Risk with NACHA’s Same-Day ACH Rules

On July 22, the Board of Governors of the Federal Reserve System (the Board) published revisions to its Policy on Payment System Risk, which are intended to conform the Board’s procedures for measuring institutions’ intraday account balances at Federal Reserve Banks with NACHA’s same-day ACH rules. The phase-in of the Board’s revisions begins September 23, 2016. Under the Board’s revisions, all receiving depository financial institutions will be required to participate in same-day ACH, and originating depository financial institutions will be required to pay a fee to receiving depository financial institutions for each same-day ACH forward transaction. Beginning September 23, 2016, credits and debits for same-day ACH credit transactions will post at 1:00 p.m. or 5:00 p.m. (Eastern time), depending on when the ACH file is received by the appropriate Federal Reserve Bank for processing. Forward ACH debit transactions will be eligible to settle same-day beginning September 15, 2017, and credits and debits for same-day ACH debit transactions will post according to the same posting rules as same-day ACH credit transactions. The posting of future-dated ACH forward transactions will not be affected, and credits and debits for these transactions will continue to post at 8:30 a.m. on the effective settlement date. Additionally, effective September 23, 2016, all ACH return items, regardless of whether the associated forward item was future-dated or same-day, will post at the next available posting time or following the settlement of the associated forward transaction, such that credits and debits for return items will post at 8:30 a.m., 1:00 p.m., 5:00 p.m., or 5:30 p.m., with the specific posting time determined by when the item is received by the appropriate Federal Reserve Bank.

Enforcement & Litigation

Florida Judge Rules Bitcoin Is Not Money

On July 25, a Florida Circuit Court judge dismissed state criminal charges against a defendant who attempted to sell bitcoins for $30,000 in cash on the ground that bitcoins are not money. Defendant Michell Abner Espinoza allegedly had agreed to sell bitcoins to an undercover Miami Beach police detective who had indicated that he would use the bitcoins to purchase stolen Russian credit-card numbers. Espinoza was charged with one count of unlawfully engaging in business as a money transmitter and two counts of money laundering. Espinoza argued that he had not committed any crime as bitcoin was not money and the purchaser’s intended use for the bitcoins was not his concern. In her opinion, the judge dismissed all charges on the grounds that “bitcoin has a long way to go before it is the equivalent of money,” stating that “Bitcoin may have some attributes in common with what we commonly refer to as money, but differ in many important aspects. While bitcoin can be exchanged for items of value, they are not a commonly used means of exchange. They are accepted by some but not by all merchants or service providers. The value of bitcoin fluctuates wildly and has been estimated to be eighteen times greater than the U.S. dollar. Their high volatility is explained by scholars as due to their insufficient liquidity, the uncertainty of future value, and the lack of a stabilization mechanism. With such volatility they have a limited ability to act as a store of value, another important attribute to money.”

FTC Settles with Fraudulent Debt Collectors for Millions as Operation Collection Protection Continues

On July 14, the FTC announced that, as part of an ongoing crackdown on deceptive collection practices, it reached a settlement with two debt collectors and three companies charged with using illegal collection tactics. As Goodwin’s Enforcement Watch previously covered here, the FTC initially brought the action against the companies in October of 2015 for allegedly taking payments from consumers by “intimidation, lies and other unlawful debt collection tactics,” in violation of the Federal Trade Commission Act (FTCA) and the Fair Debt Collection Practices Act (FDCPA). As part of the settlement, the companies are required to pay a judgment of $4,802,646, and the two individual defendants must pay amounts of $59,207 and $50,562. It also bans the defendants from the debt collection business, prohibits them from misrepresenting material facts about financial-related products and services, and prohibits them from profiting from personal information of consumers without properly disclosing its actions. The U.S. District Court for the Central District of California entered the settlement order on July 11, 2016.

Goodwin Files Supreme Court Amicus Brief on Behalf of the Mortgage Industry

On July 25, Goodwin filed a certiorari-stage amicus brief on behalf of the Mortgage Bankers Association, Consumer Mortgage Coalition, and several other mortgage industry groups. The case involves a Connecticut law that tripled recording charges for mortgages and mortgage assignments when Mortgage Electronic Registration Systems, Inc. (MERS) is a party to a mortgage. On February 8, 2016, the Connecticut Supreme Court held that the law did not discriminate against interstate commerce in violation of the dormant Commerce Clause. The industry’s amicus brief detailed the history of how federal government and industry partnered to create MERS to address significant recording backlogs, errors, costs, and fraud that occurred in county recording offices as securitization increased in the 1980s and 1990s. Instead of having to draft, execute, ship, record and track mortgage assignments in paper format every time a loan was transferred from one party to another, MERS allowed lenders to track loan transfers electronically on the MERS® System’s national electronic database. Two decades later, the vast majority of new home loans are made using the MERS® System. National, regional and online lenders, as well as federal law enforcement agencies and state governments, now rely on the MERS® System to facilitate lending and detect fraud. The brief argued that Connecticut’s law, which imposes three-fold recording fees if a national electronic database like MERS is a party, facially discriminates against interstate commerce in direct violation of the dormant Commerce Clause. The brief went on to describe how Connecticut’s law, if allowed to stand and if followed by other states, could not only significantly impair lenders’ use of the MERS® System, but could also adversely affect other aspects of the mortgage lending industry and interstate commerce generally.

 

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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. 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. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our 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 are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy 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 our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

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

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.