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Financial Services Law Insights and Observations


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  • OCC releases bank supervision operating plan for FY 2024

    On September 28, the OCC’s Committee on Bank Supervision released its bank supervision operating plan for fiscal year 2024. The plan outlines the agency’s supervision priorities and highlights several supervisory focus areas including: (i) asset and liability management; (ii) credit; (iii) allowances for credit losses; (iv) cybersecurity; (v) operations; (vi) digital ledger technology activities; (vii) change in management; (viii) payments; (ix) Bank Secrecy Act/AML compliance; (x) consumer compliance; (xi) Community Reinvestment Act; (xii) fair lending; and (xiii) climate-related financial risks.

    Two of the top areas of focus are asset and liability management and credit risk. In its operating plan the OCC says that “Examiners should determine whether banks are managing interest rate and liquidity risks through use of effective asset and liability risk management policies and practices, including stress testing across a sufficient range of scenarios, sensitivity analyses of key model assumptions and liquidity sources, and appropriate contingency planning.” With respect to credit risk, the OCC says that “Examiners should evaluate banks’ stress testing of adverse economic scenarios and potential implications to capital” and “focus on concentrations risk management, including for vulnerable commercial real estate and other higher-risk portfolios, risk rating accuracy, portfolios of highest growth, and new products.”

    The plan will be used by OCC staff to guide the development of supervisory strategies for individual national banks, federal savings associations, federal branches and agencies of foreign banking organizations, and certain identified third-party service providers subject to OCC examination.

    The OCC will provide updates about these priorities in its Semiannual Risk Perspective, as InfoBytes has previously covered here.

    Bank Regulatory Federal Issues OCC Supervision Digital Assets Fintech Privacy, Cyber Risk & Data Security UDAP UDAAP Bank Secrecy Act Anti-Money Laundering Climate-Related Financial Risks Fair Lending Third-Party Risk Management Risk Management

  • SEC adopts truth-in-advertising rule enhancements for funds


    On September 20, the SEC adopted amendments (as set forth in the final rule and as discussed in the fact sheet) to the Investment Companies Act rule that requires investment companies whose names suggest a focus in a particular type of investment to adopt a policy to invest not less than 80 percent of the value of their assets in those investments (the “Names Rule”).   The agency said amendments to the Names Rule will enhance its protections by addressing gaps in the current requirements and will “help ensure that a fund’s portfolio aligns with a fund’s name.”

    The Names Rule promotes truth-in-advertising by ensuring that a fund whose name accurately suggests a focus on a particular type of investment adopt a policy to align its portfolio to put 80 percent of its assets toward the cause suggested by its name (the “80 percent investment policy”). 

    The SEC said, “the amendments will enhance the rule’s protections by requiring more funds to adopt an 80 percent investment policy, including funds with names suggesting a focus in investments with particular characteristics, for example, terms such as 'growth' or 'value,' or certain terms that reference a thematic investment focus, such as the incorporation of one or more Environmental, Social, or Governance factors.”

    The amendments will expand the requirement to adopt an 80 percent investment policy to more funds, including those with names suggesting a focus in investments with particular characteristics (e.g., “growth” or “value”), or certain terms that reference the incorporation of one or more ESG factors. The amendments will also (i) require that a fund conduct a quarterly review of its portfolio assets’ treatment under its 80 percent investment policy; (ii) establish deadlines for getting back into compliance if a fund departs from its 80 percent investment policy; (iii) enhanced prospectus disclosure requirements to require that terminology used in fund names that suggest an investment focus must be consistent with the plain English meaning or established industry use of such terms.

    The amendments will become effective 60 days after publication in the Federal Register.  Fund groups with more than $1 billion in assets under management will have two years to comply with the rule. Funds that manage less than $1 billion will be given 30 months to comply with the rule.

    Securities Privacy, Cyber Risk & Data Security Agency Rule-Making & Guidance SEC

  • SEC approves final Privacy Act rules


    On September 20, the SEC announced the approval of its revised Privacy Act rules, which govern the handling of personal information in the federal government. Among other things, the final rule will update, clarify, and streamline the SEC’s Privacy Act Regulations by (i) clarifying the purpose and scope of the regulations; (ii) updating definitions to plainly describe regulation processes; (iii) allowing for electronic methods to verify requesters identities and submit Privacy Act requests; and (iv) providing for a shorter response time to Privacy Act requests. The final rule will also update fee provisions and eliminate unnecessary provisions. The SEC last updated its Privacy Act rules in 2011, and due to the extent of the provisions, the final rule will replace the commission’s current Privacy Act regulations entirely.

    The revised rule will take effect 30 days after publication in the Federal Register.

    Securities Privacy, Cyber Risk & Data Security Agency Rule-Making & Guidance SEC

  • UK-U.S. data bridge adequacy regulations to come into effect October 12

    Privacy, Cyber Risk & Data Security

    The EU-US Data Privacy Framework (the “Framework”) sets forth a set of principles and requirements that US organizations can comply with and, following certification, be permitted to join the Framework. On October 12, the UK extension to the Framework will come into effect following the UK digital minister’s submission of regulation and the US Attorney General’s designation of the UK as a “qualifying state.”

    This data bridge and the associated framework ensures that the level of protection for UK individual’s personal data, as provided for under UK GDPR, is maintained. The FTC and U.S. Department of Transportation are the independent supervisory authorities for the UK extension, which is administered by the U.S. Department of Commerce.


    Privacy, Cyber Risk & Data Security Of Interest to Non-US Persons UK EU-US Data Privacy Framework GDPR

  • Tech giant to pay $62M in smartphone location tracking suit


    On September 14, 2023, in the U.S. District Court of the Northern District of California, San Jose Division, plaintiffs filed a motion for preliminary approval of a proposed Class Action Settlement Agreement and Release pursuant to which a tech giant will pay $62 million to resolve claims that it illegally tracked and stored such users’ private location information even after users opted out. According to the filing, the proposed settlement “would be used to pay for the costs of Notice and Settlement administration, any Court-awarded attorneys’ fees and expenses and Class Representative Service Awards” with the balance being “distributed to one or more Court-approved cy pres recipients” each of which must be “independent 501(c)(3) organizations with a track record of addressing privacy concerns on the Internet.”

    The company also agreed to injunctive relief for a period of at least three years, requiring it to, among other things: (i) “maintain a policy whereby (a) Location Information stored through Location History (“LH”) and Web & App Activity (“WAA”) is automatically deleted by default after a period of at least 18 months when users opt into these settings for the first time, and (b) users can set their own auto-delete periods;” (ii) provide users with instructions on how to disable each data collection setting, delete the data collected, and set retention limits; and (iii) confirm that the company “does not now share users’ precise Location Information collected in LH or WAA with third parties (except for valid legal reasons).” The settlement class includes as many as 247 million smartphone users whose location information the company stored “while “Location History” was disabled” from January 1, 2014, through the notice date.

    In a statement on September 15, a spokesperson for the company said “[c]onsistent with improvements we've made in recent years, we have settled this matter, which was based on outdated product policies that we changed years ago."

    Courts Privacy, Cyber Risk & Data Security Consumer Protection Settlement

  • Delaware Personal Data Privacy Act to protect consumers

    State Issues

    On September 11, Delaware’s governor signed HB 154 (the “Act”), which creates the Delaware Personal Data Privacy Act. The Act ensures that residents of Delaware have the right to be informed about the collection of their personal information, access that information, rectify any inaccuracies, or request the deletion of their personal data held by individuals or entities. The Act will apply to those who conduct business in the State, that “produce products or services that are targeted to residents of the State [of Delaware] and that during the preceding calendar year,” processed personal data of more than 35,000 consumers, or processed the personal data of at least 10,000 consumers while deriving more than 20 percent of their gross revenue from personal data sales. Additionally, the Act mandates that the Delaware Department of Justice conduct public outreach programs to educate consumers and the business community about the Act, starting at least 6 months before the date on which the Act becomes effective.

    The Act is effective on January 1, 2025.

    State Issues Privacy, Cyber Risk & Data Security Delaware Consumer Protection State Legislation

  • CPPA continues efforts towards California Privacy Rights Act

    State Issues

    The California Privacy Protection Agency board is continuing its efforts to prepare regulations implementing the California Privacy Rights Act (covered by InfoBytes here and here).

    Draft risk assessment regulations and cybersecurity audit regulations were released in advance of the September 8 open meeting held by the board. Draft regulations on automated decision-making remain to be published. More comprehensive comment and feedback is expected on these draft regulations, unlike regulations finalized in March that were presented in a more robust state. As previously covered by InfoBytes, the California Privacy Protection Agency cannot enforce any regulations until a year after their finalization, adding a ticking reminder to the finalization process for these draft regulations.

    The draft cybersecurity regulations include thoroughness requirements for the annual cybersecurity audit, which must also be completed “using a qualified, objective, independent professional” and “procedures and standards generally accepted in the profession of auditing.” A management certification must also be signed certifying the business has not influenced the audit, and has reviewed the audit and understands its findings.

    The draft risk assessment regulations require conducting a risk assessment prior to initiating processing of consumers’ personal information that “presents significant risk to consumers’ privacy,” as set forth in an enumerated list include the selling or sharing of personal information; processing personal information of consumers under age 16; and using certain automated decision-making technology, including AI.

    State Issues Privacy California CCPA CPPA CPRA Compliance State Regulators Opt-Out Consumer Protection

  • DOJ announces international malware action, recovers $8.6 million in illicit profits

    Privacy, Cyber Risk & Data Security

    On August 29, the DOJ announced a multinational operation involving the U.S., France, Germany, the Netherlands, the UK, Romania, and Latvia to “disrupt” a malware’s infrastructure called Qakbot. Attorney General Merrick B. Garland stated that, “[t]ogether with our international partners, the Justice Department has hacked Qakbot’s infrastructure, launched an aggressive campaign to uninstall the malware from victim computers in the United States and around the world, and seized $8.6 million in extorted funds. ” The main method by which the Qakbot malware spreads to target computers is via spam emails that contain harmful attachments or links. Upon successfully infecting a target computer, the DOJ mentioned that Qakbot gains the capability to introduce other types of malware, such as ransomware. Over the past few years, many ransomware collectives have used Qakbot as an initial avenue for initiating infections and has caused hundreds of millions of dollars in damages. The DOJ highlighted that “[t]he action represents the largest U.S.-led financial and technical disruption of a botnet infrastructure leveraged by cybercriminals to commit ransomware, financial fraud, and other cyber-enabled criminal activity.”

    Privacy, Cyber Risk & Data Security Federal Issues Financial Crimes DOJ Malware Enforcement

  • NIST updates its Cybersecurity Framework

    Privacy, Cyber Risk & Data Security

    The National Institute of Standards and Technology (NIST) recently unveiled a proposed update to its Cybersecurity Framework, which was originally developed to provide information security guidelines for “critical infrastructure” like banking and energy industries. (Covered by InfoBytes here). The update includes a new, sixth pillar called “govern” that provides categories to facilitate executive oversight; manage enterprise risk (including supply chain risk); and effective alignment of enterprise resources, strategies, and risk, emphasizing that “cybersecurity is a major source of enterprise risk and a consideration for senior leadership.” This pillar will also guide organizations’ leadership in making internal decisions to support its cybersecurity strategy. The framework draft also updated its implementation guidance, especially for creating profiles that tailor guidance for certain situations. Additionally, NIST included implementation examples that are particularly beneficial for smaller firms. The framework’s lead developer, Cherilyn Pascoe, mentioned the framework has proven useful across many different sectors like small businesses and foreign governments, therefore it was updated to be a useful tool to sectors, regardless of type or size, outside of those designated as critical. A major goal of the updated version of the framework is to show organizations how to leverage existing technology frameworks, standards, and guidelines to implement NIST’s framework. Furthermore, the framework title changed from “Framework for Improving Critical Infrastructure Cybersecurity” to “The Cybersecurity Framework” to reflect its expanded inclusivity and wide adoption.

    Public comments must be received by November 4.

    Privacy, Cyber Risk & Data Security Federal Issues NIST Risk Management

  • 7th Circuit affirms dismissal of proposed Driver’s Privacy Protection Act class action

    Privacy, Cyber Risk & Data Security

    On August 22, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of a proposed class action alleging that defendant insurance companies leaked the plaintiffs’ drivers license numbers, holding that the plaintiffs lacked standing to sue the insurance companies. In a split decision, the majority opinion held that plaintiffs failed to establish standing to bring a lawsuit under the Driver’s Privacy Protection Act (DPPA) based on the unauthorized disclosure of their driver’s license numbers through a form on defendant’s website. The majority held that plaintiffs failed to allege a concrete injury, writing that allegations that plaintiffs are worried about future identity theft stemming from the disclosure are insufficient for standing, focusing on legitimate reasons why driver’s license numbers are commonly exposed to third-parties. The majority further held that plaintiffs failed to allege that false unemployment benefit applications submitted in their name were traceable to the disclosure of their driver’s license number, dooming their standing claim. In a dissent, Judge Kenneth Ripple disagreed with the majority’s conclusion that plaintiffs failed to make sufficient allegations to justify standing, reasoning that the DPPA contemplates a private right of action for the types of harms suffered by the plaintiffs and that plaintiffs adequately alleged that they suffered harm from false unemployment benefit applications submitted as a result of the driver’s license number leak.

    Privacy, Cyber Risk & Data Security Courts Consumer Protection Seventh Circuit Class Action


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