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NYDFS issues first “conditional Bitlicense”
On October 21, NYDFS announced authorization for a digital payments company to launch a service for U.S. customers to buy, sell, and hold certain NYDFS-approved cryptocurrencies. Under the terms of the “conditional Bitlicense,” the payments company will partner with a New York-chartered trust company responsible for providing cryptocurrency trading and custodial services. According to NYDFS Superintendent Linda Lacewell, this first conditional Bitlicense represents the state regulator’s efforts “to encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace in a way that is both timely and protective of New York consumers.” NYDFS first announced the proposed conditional licensing framework in June (covered by InfoBytes here).
Global financial institution pays $2.9 billion to settle Malaysian FCPA conspiracy and bribery charges
On October 22, the DOJ announced that it entered into a deferred prosecution agreement with a global financial institution headquartered in New York (the company), in which the company agreed to pay a criminal fine of over $2.9 billion related to violations of the FCPA’s anti-bribery provisions. The company’s Malaysian subsidiary also pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the FCPA.
According to the DOJ, between 2009 and 2014, the company participated in a scheme to pay over $1.6 billion in bribes, directly and indirectly, to Malaysian and Abu Dhabi officials to obtain business, including a role in underwriting approximately $6.5 billion in three bond deals for a Malaysian sovereign wealth fund regarding energy development (previous InfoBytes coverage on the charges available here). The DOJ stated that the company admitted to engaging in the scheme through certain employees and agents, including (i) the company’s former Southeast Asia Chairman and managing director, who pleaded guilty in 2018 to conspiring to launder money and to violate the FCPA (covered by InfoBytes here); (ii) a former managing director and head of investment banking for the company’s Malaysian subsidiary, who was charged and subsequently extradited to the U.S. in 2019 and is scheduled to stand trial in March 2021 for conspiring to launder money and to violate the FCPA (covered by InfoBytes here); and (iii) a former executive who held leadership positions in Asia. The company admitted that their former employees and agents conspired with a Malaysian financier (who was indicted in 2018, covered by InfoBytes here) to bribe officials involved in the strategic development initiative by using funds diverted and misappropriated from bond offerings underwritten by the company. The employees and financer also retained a portion of the diverted funds for themselves. The company admitted that it did not take significant steps to ensure the Malaysian financier was not involved in the bond transactions even though they were aware his involvement posed “significant risk,” and the company ignored or nominally addressed the “significant red flags” raised during the due diligence process. The company received approximately $606 million in fees and revenue as a result of the scheme.
The company’s $2.9 billion criminal penalty and disgorgement includes $1.6 billion in payments with respect to separate resolutions with foreign authorities in the United Kingdom, Singapore, Malaysia, and other domestic authorities in the U.S., including $154 million to the Federal Reserve, over $400 million to the SEC, and $150 million to the New York Department of Financial Services.
Issuer pays $5 million penalty for unregistered digital offering
On October 21, the SEC announced the U.S. District Court for the Southern District of New York entered a final judgment against a tech company issuer that raised approximately $100 million through an unregistered initial coin offering. As previously covered by InfoBytes, the SEC filed an action alleging the issuer failed to provide required disclosures to investors and did not register the offer or sale of its digital tokens with the SEC, as required by Section 5 of the Securities Act of 1933 (the Act). The SEC argued that the issuer marketed the digital tokens as an investment opportunity and told investors that they could earn future profits from the issuer’s efforts to create, develop, and support a digital “ecosystem.”
The court granted summary judgment in favor of the SEC at the end of September, concluding, among other things, that the issuer violated Section 5 of the Act when it conducted an unregistered offering of securities that did not qualify for any exemption from registration requirements. The final judgment (i) requires the issuer to pay $5 million in a civil penalty; (ii) permanently enjoins the issuer from violating Section 5 of the Act; and (iii) requires the issuer, for a period of three years, to provide notice to the SEC before engaging in any “issuance, offer, sale or transfer” of specified assets.
Oklahoma regulator extends working from home guidance through end of year
On October 22, the Oklahoma Department of Consumer Credit extended, for the fifth time, its interim guidance to regulated entities on working from home (see here, here, here, here, and here for previous coverage). The guidance sets forth data security standards for regulated entities with employees working from home and also provides that the department will expedite and waive fees for change of address applications in the event that a licensed location is compromised by Covid-19 or is undergoing decontamination. The guidance was extended through December 31, 2020.
Tennessee suspends certain requirements for MLO license renewals for 2021
On October 22, the Tennessee Department of Financial Institutions issued a memorandum to licensed mortgage loan originators suspending its requirement that licensees complete a criminal background check or authorize a credit report if they have not done so in the past three years as a condition to renewal for calendar year 2021, except where the mortgage loan originator has entered into a consent agreement with the department requiring such actions. The memorandum states the requirement will be in effect for licensee renewal for calendar year 2022.
FDIC provides relief from audit, reporting requirements triggered by stimulus-related asset growth
On October 20, the FDIC issued an interim final rule providing regulatory relief to insured depository institutions (IDIs) that have experienced significant, but temporary, asset growth due to government stimulus efforts. Previously, an IDI would be subject to annual independent audit and reporting requirements in any fiscal year in which its assets at the start of the year were $500 million or more. The interim rule permits IDIs to determine if they are subject to these requirements for fiscal years ending in 2021 based on their consolidated total assets as of December 31, 2019, or as of the beginning of their fiscal years ending in 2021, whichever is less. However, the rules also permit the FDIC to require IDIs to comply with the audit and reporting requirements if asset growth was related to a merger or acquisition. The rule will remain in effect through December 31, 2020, unless extended.
FHA extends deadline for Covid-19 loss mitigation options
On October 20, FHA announced that homeowners experiencing a Covid-19 financial hardship with FHA-insured mortgages can request an initial forbearance or a Home Equity Conversion Mortgage (HECM) extension through December 31. Specifically, Mortgagee Letter 2020-34 extends the date by which mortgagees must approve the initial Covid-19 forbearance or Covid-19 HECM extension originally provided for in ML 2020-06 and expanded in ML 2020-22 (covered by InfoBytes here and here). FHA notes that due to the continued Covid-19 pandemic and its impact on borrowers around the country, the agency is extending the deadline through December 31 from the original deadline of October 30.
New York governor extends suspension of eviction orders
On October 20, the New York governor issued an executive order extending the state’s moratorium on commercial evictions and foreclosures related to Covid-19 until January 1, 2021. For previous coverage, see here, here and here.
New Mexico renews Covid-19 Health Emergency and impacted executive orders through November 13
On October 16, the New Mexico governor issued an executive order renewing and extending the public health emergency until November 13, 2020. The executive order also extends the duration of Executive Order 2020-039 (previously covered here and here) to continue to permit notarial acts conducted through audio-visual technology, provided certain requirements are met.
Maryland issues new executive order regarding foreclosures and repossessions
On October 16, 2020, the Maryland governor issued Executive Order 20-10-16-01 to amend and restate an April 3 executive order regarding foreclosures and repossessions (previously covered here). The executive order, among other things: (i) suspends requirements regarding the repossession of any chattel home by self-help until the state of emergency is terminated; (ii) suspends the sale of certain properties unless certain notices are provided, (iii) suspends the operation of the commissioner’s Notice of Intent to Foreclose Electronic System, and discontinues acceptance of Notices of Intent to Foreclose until January 4, 2021, and (iv) suspends any judgment for possession or repossession, or warrant for restitution of possession or repossession of residential, commercial, or industrial real property, if the tenant can demonstrate that he/she suffered a substantial loss of income resulting from Covid-19 or related events. Maryland’s commissioner of financial regulation issued a Foreclosure Update and Repossession Update outlining the executive order.