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Financial Services Law Insights and Observations


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  • DFPI orders desist and refrain against investment firm

    State Issues

    On November 16, under California Corporations Code § 25532, the California Division of Financial Protection and Innovation (DFPI) issued a desist and refrain order against a securities investment platform for allegedly making false representations and material omissions to investors.

    The DFPI alleges the investment platform sold securities in California on its website and the platform referred to them as “certificates.” The platform claimed that the certificates paid investors returns ranging from 2.5 percent to five percent in addition to guaranteed monthly returns. To solicit investors, the platform allegedly engaged in a multi-level marketing (MLM) structure that would have investors influence others to send money. DFPI alleged that the certificates were not qualified under the California Corporate Securities Law. DFPI also alleged that the platform omitted material information to investors, which included (i) falsely representing that the platform was partnered with a particular forex broker; (ii) representing that it was a licensed bank (while omitting that the “license” was granted by a “fictitious regulator”); (iii) using the terms “bank” and “banking” while omitting that it was not authorized to engage in the business of banking in California; (iv) misrepresenting profits and risk of loss; and (v) failing to disclose that its securities were not qualified in California.  

    State Issues Securities DFPI Enforcement Investment California

  • Treasury releases CFIUS Enforcement and Penalty Guidelines

    Financial Crimes

    On October 20, the U.S. Treasury Department released CFIUS Enforcement and Penalty Guidelines to provide the public with information on how the Committee on Foreign Investments in the United States (CFIUS) assesses violations of laws and regulations on transaction parties. The guidelines inform the public about how CFIUS—which is tasked with identifying and mitigating certain national security risks related to foreign investments—assesses whether to impose a penalty or take other enforcement action for a violation of a party’s obligation, as well as factors that CFIUS considers when making such a determination. “The vast majority of those who come before CFIUS abide by their legal obligations and work collaboratively with the Committee to mitigate any national security risks arising from the transaction; however, those who fail to comply with CFIUS mitigation agreements or other legal obligations will be held accountable,” Assistant Secretary of the Treasury for Investment Security Paul Rosen stressed. “Today’s announcement sends a clear message: Compliance with CFIUS mitigation agreements is not optional, and the Committee will not hesitate to use all of its tools and take enforcement action to ensure prompt compliance and remediation, including through the use of civil monetary penalties and other remedies.”

    Financial Crimes Agency Rule-Making & Guidance Of Interest to Non-US Persons Department of Treasury CFIUS Investment

  • FOMC adopts investment and trading activity rules

    On February 18, the Federal Reserve Board announced that the Federal Open Market Committee (FOMC) adopted new comprehensive rules for the investment and trading activity of senior officials that were first announced in October 2021. The rules aim to enhance public confidence in the impartiality and integrity of the Committee's work. The new rules prohibit senior Federal Reserve officials from: (i) purchasing individual stocks or sector funds; (ii) holding investments in individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies; (iii) entering into derivatives contracts; or (iv) engaging in short sales or purchasing securities on margin. The new rules also require senior Federal Reserve officials “to provide 45 days’ non-retractable notice for purchases and sales of securities, obtain prior approval for such transactions, and hold investments for at least one year.” Purchases and sales will be prohibited during periods of heightened financial market stress. The rules become effective on May 1, except that the requirements for advance notice and pre-clearance of transactions will take effect on July 1.

    Bank Regulatory Federal Issues Federal Reserve FOMC Investment

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