Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
On July 19, the New Jersey Bureau of Securities (Bureau) announced a cease and desist order against a financial services company for allegedly selling unregistered securities in the form of interest-earning cryptocurrency accounts and failing to explain to investors that the accounts were not licensed in New Jersey. According to the order, the company has been funding its lending operations and proprietary trading business since 2019 by selling interest-bearing cryptocurrency accounts that are not protected by or registered with any federal or state securities regulator. The order notes that the company “held the equivalent of $14.7 billion from the sale of these unregistered securities in violation of the Securities Law.” In addition, the order, which become effective July 22, requires the company to stop selling any unregistered security or violating any securities law. According to the Bureau, the recent action “comes amid rising concerns over the proliferation of decentralized finance platforms like [the company] that seek to reinvent traditional financial systems such as banks and brokerages for digital asset investors,” and that “[u]nlike traditional, regulated banks and brokerage firms, however, investors’ losses are not insured against or protected by the Federal Deposit Insurance Corporation or Securities Investor Protection Corporation.”
On January 21 the New Jersey Commissioner of Banking and Insurance issued Bulletin No. 21-02 declaring that the department will no longer accept temporary insurance producer applications after January 31 because remote producer examinations are now available. Temporary licenses previously issued will remain in force subject to certain conditions set forth in the bulletin.
On August 3, the New Jersey issued Bulletin No. 20-28, which permits qualified individual applicants seeking a temporary resident insurance producer license in New Jersey to submit the application for licensure electronically through the National Insurance Producer Registry (NIPR). Applicants also have the option of submitting paper applications in lieu of filing an application electronically. The guidance sets forth the qualifications for licensure and procedures to apply for a temporary insurance producer license. It also specifies the electronic application procedures through NIPR and the applicable timelines.
On June 12, the New Jersey Bureau of Securities, within the Office of the Attorney General Division of Consumer Affairs, announced that its annual investment adviser examinations are underway. This year’s examination will include questions asking investment adviser firms, among other things, about the impact of Covid-19 on operations and the steps taken to protect senior investors. The examination intends to survey the impact Covid-19 has had on investment advisers and to assess their business continuity plans.
New Jersey Department of Banking and Insurance extends no-action position regarding temporary work from home
On May 28, the New Jersey Department of Banking and Insurance issued Bulletin No. 20-26 to certain licensees regarding temporarily working from home due to Covid-19. The bulletin extends the department’s no-action position regarding licensure for certain branch office locations due to individuals temporarily working from home first announced in Bulletin No 20-06 (covered here). The no-action position is only effective with a submission that includes specified materials and may be subject to pre-conditions and operating, reporting, and other requirements. Licensees who have already submitted materials to the department in response to Bulletin No. 20-06 are not required to resubmit those materials.
On May 12, the New Jersey Department of Banking and Insurance issued Bulletin No. 20-22 to certain insurance-related entities, including licensed, admitted, and surplus lines insurers transacting property and casualty insurance in New Jersey. In light of the reduced risk of loss for certain insurance as a result of Covid-19, the bulletin requires premium reductions for those lines of insurance. Where applicable, insurers are ordered to make an initial premium refund or other adjustment to adversely impacted New Jersey policy-holders, and for each month that the public health emergency is in effect. Instructions are provided for submitting the components of the refund program via the System for Electronic Rates and Forms Filing. Insurers that can demonstrate that their rates are not excessive, inadequate, or unfairly discriminatory, or that otherwise contend they should not be subject to the terms of the bulletin, may submit the basis for this position and supporting documentation by June 1, 2020.
On May 12, the New Jersey Department of Banking Insurance issued a bulletin regarding the extension of deadlines for certain entities and individual regulated by the Division of Banking to file annual reports. Certain enumerated licensees, including check cashers, insurance premium finance companies, motor vehicle installment sellers, and money transmitters, are granted an extension until June 1 to file annual reports. However, licensees must file their subsequent annual report by April 1, 2021. Mortgage lenders and mortgage brokers who are required to file an annual report on or before May 1, are also granted an extension to June 1. The next annual report must be filed by May 1, 2021.
On April 24, the New Jersey governor issued an executive order allowing tenants to request that their landlords use their security deposits to offset or pay back rent. The order is effective immediately and will be in place until 60 days after the public health emergency has terminated.
On April 23, the New Jersey Department of Banking and Insurance extended the deadline for license and registration applications under New Jersey’s Mortgage Servicers Licensing Act to June 12, 2020. Persons required to seek licensure under the act include entities that are in the business of servicing residential mortgage loans, and which are not already licensed as residential mortgage lenders and entities licensed as residential mortgage lenders or correspondent residential mortgage lenders conducting business in New Jersey.
On April 23 and 21, nine states announced a multi-state initiative to provide student loan relief options for borrowers with privately held student loans not covered by the CARES Act. California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, Vermont, and Washington outlined within their announcements specific measures for borrowers with commercially-owned Federal Family Education Loan Program loans and borrowers with private student loans who are struggling to make payments due to the Covid-19 pandemic. The announcements also noted that Virginia is participating in the initiative as well. These relief options, offered in conjunction with the listed private student loan servicers, include (i) a minimum 90-days of forbearance relief; (ii) a waiver of late fees; (iii) no negative credit reporting; (iv) a 90-day moratorium on collection lawsuits; and (v) enrollment in applicable borrower assistance programs, such as income-based repayment. The states cautioned that enrollment in these relief options is not automatic, and recommended borrowers contact their student loan servicer to see what options best suit their needs.
In addition, California, Colorado, Connecticut, New Jersey, Vermont, and Washington recommended that regulated student loan servicers with limited ability to take these actions due to investor restrictions or contractual obligations “should instead proactively work with loan holders whenever possible to relax those restrictions or obligations.”
- Jonice Gray Tucker to discuss “Updates on Artificial Intelligence Regulations - the U.S. and EU” at the American Bar Association Busines Law Section Meeting
- Jonice Gray Tucker to discuss “Government investigations, and compliance 2021 trends” at the Corporate Counsel Women of Color Career Strategies Conference
- APPROVED Webcast: California debt collection license requirement: Overview and analysis
- Max Bonici to discuss “BSA/AML trends: What to expect with the implementation of the AML Act of 2020” at the American Bar Association Banking Law Fall Meeting
- Jeffrey P. Naimon to discuss “Regulators are gearing up: Are you ready?” at HousingWire Annual
- Amanda R. Lawrence and Elizabeth E. McGinn discuss “U.S. state privacy legislation – Are you compliant?” at the Privacy+Security Forum
- H Joshua Kotin to discuss “Modifications and exiting forbearance” at the National Association of Federal Credit Unions Regulatory Compliance Seminar
- Jonice Gray Tucker and Kari K. Hall to discuss “Consumer Protection Priorities in the Biden Administration and Beyond" at the SWABC and TBA 2021 Legal Conference
- Jonice Gray Tucker to discuss “Fintech trends” at the BIHC Network Elevating Black Excellence Regional Summit
- Jeffrey P. Naimon to discuss "Truth in lending” at the American Bar Association National Institute on Consumer Financial Services Basics
- John R. Coleman and Amanda R. Lawrence to discuss “Consumer financial services government enforcement actions – The CFPB and beyond” at the Government Investigations & Civil Litigation Institute Annual Meeting
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute
- Jonice Gray Tucker to discuss “Regulators always ring twice: Responding to a government request” at ALM Legalweek