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Buckley Hosts Webinar on TRID for Investors
On September 15, Buckley hosted a webinar, "TRID for Investors" presented by Buckley. The webinar addressed what purchasers of mortgage loans need to know about the TILA-RESPA Integrated Disclosure rule (TRID rule) that goes live on October 3, 2015. Specifically, evolving assignee liability, identifying risks, correcting errors, and identifying apparent errors. They also discussed ambiguous liabilities and common misconceptions, and focused on information that will help investors develop instructions and procedures that reduce litigation risk without unnecessarily limiting the pool of loans meeting those standards. For additional information and resources on the TRID rule, please visit our TRID Resource Center.
CFPB Sues World Law Group Over Illegal Fees and False Promises in Debt-Relief Scheme
On September 15, the CFPB announced a preliminary injunction obtained against World Law Group and its senior leaders for allegedly running a debt-relief scheme that charged consumers costly and illegal upfront fees. According to the CFPB, “the debt-relief scheme falsely promised consumers a team of attorneys to help negotiate debt settlements with creditors, failed to provide legal representation, and rarely settled consumers’ debts.” Specifically, the complaint alleges that defendants charged consumers upfront fees before providing debt-relief services in violation of the Telemarketing Sales Rule. The complaint also alleges that World Law Group falsely promised legal representation to consumers who did not receive the promised legal representation. The underlying lawsuit remains pending following the granting of the preliminary injunction.
FIFA Investigation Expands In Scope; Former FIFA VP Extradited to United States
On September 14, U.S. Attorney General Loretta Lynch announced that the DOJ is expanding its FIFA investigation to pursue additional charges against individuals and companies. AG Lynch made these comments at a press conference in Zurich with Switzerland’s Attorney General, Michael Lauber. The DOJ has been working closely with Swiss officials in its investigation, and has charged 14 FIFA officials with racketeering, wire fraud, and money laundering.
Additionally, on September 17, the Swiss Federal Office of Justice approved the extradition of Eugenio Figueredo, a former vice president of the South American Football Confederation and former vice president of FIFA, to the United States. Figueredo was one of seven defendants fighting extradition from Switzerland. In July, Jeffrey Webb, a former vice president of FIFA, agreed to be extradited to the United States, but the remaining five defendants are awaiting decisions on extradition.
Previous BuckleySandler coverage of this investigation can be found here.
State Banking Regulators Issue Model Regulatory Framework for Virtual Currency Activities
On September 15, the Conference of State Bank Supervisors (CSBS) issued its Model Regulatory Framework for State Regulation of Certain Virtual Currency Activities (Model Framework). The CSBS Emerging Payments Task Force developed the Model Framework to assist states in licensing and regulating virtual currency activities. The Model Framework includes key components to a regulatory scheme that the CSBS hopes will protect consumers and the larger marketplace while facilitating innovation. It also defines virtual currency and describes specifically covered virtual currency activities, such as those involving third-party controls of virtual currency. Additionally, the Model Framework provides flexibility in denominating permissible investments, tailoring cybersecurity audits to a company’s business model, and includes an addition to the BSA/AML Compliance section that recommends that states require verification of an entity’s service users and account holders. The Model Framework also includes a supervision component that requires the establishment of policies and procedures that protect customer access to funds in the event of an institutional failure.
The Model Regulatory Framework for State Regulation of Certain Virtual Activities can be seen here.
Traders Who Allegedly Profited from Hacked News Releases Settle With SEC for $30 Million
On September 14, the SEC announced that it had reached a $30 million settlement with two defendants who allegedly profited from trading based on information hacked from newswire services. The settlement stems from an SEC complaint filed in August against 34 defendants for their alleged involvement in an international scheme that generated over $100 million in illegal profits over a five-year period. According to the SEC charges, defendants hacked into newswire services and transmitted stolen data to a network of international traders. The SEC claims that the parties to the settlement made $25 million in illicit profits by buying and selling contracts-for-differences (CFDs) based on hacked press release information they received from other defendants. In the proposed settlement offer, which requires court approval, the two defendants neither admit nor deny the SEC’s allegations, but agree to be enjoined from violating U.S. and SEC securities antifraud provisions, and to return $30 million in alleged illegal profits. The Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit stated that the discovery and prosecution of the scheme “should serve as a shot across the bow of any trader who thinks that CFDs traded outside the United States can be used to mask their unlawful conduct,” and demonstrates the SEC’s “ability to police this opaque market.” The SEC’s case against the remaining 32 defendants remains pending.
NYDFS Reaches Agreements with Four Banks on New Symphony Chat & Messaging Platform
On September 14, the New York State Department of Financial Services (NYDFS) announced that it had reached agreements with four financial institutions on record-keeping requirements and other protections intended to help ensure the institutions’ responsible use of the new Symphony Communications LLC (Symphony) chat and messaging platform. NYDFS had recently expressed concerns that certain Symphony features, such as its promise of “Guaranteed Data Deletion,” could hinder regulatory investigations on Wall Street. Under the agreements, Symphony will retain for seven years a copy of all electronic communications sent through its platforms to or from the four banks, and the banks will store duplicate copies of the decryption keys for their messages with independent custodians.
FCC Cites Two Companies over Unauthorized Telemarketing Allegations
On September 11, the FCC issued citations against a Pennsylvania-based financial institution and a transportation network company (TNC), alleging that both companies engaged in unlawful business practices by infringing consumers’ rights to be free of unauthorized telemarketing robocalls to residential and wireless phones. The financial institution’s citation alleges that the bank required customers to agree to receive autodialed telemarketing texts in order to use its online banking and Apple Pay services. The TNC’s citation alleges that, although it allows consumers who sign up for ride-sharing service to opt out of receiving autodialed or prerecorded telemarketing calls and texts, the TNC does not allow users to access the service if they exercise these opt out rights. Both citations allege that these practices violate the FCC’s rules implementing the Telephone Consumer Protection Act (TCPA), and direct the companies to take immediate steps to come into compliance with the FCC’s rules, orders, and the TCPA prohibition against unlawful marketing and advertising calls. The FCC also warned that future violations may result in monetary forfeitures.
DOJ Unveils New Policy on Individual Liability in White-Collar Prosecutions
On September 9, the Department of Justice (DOJ), issued a policy memorandum concerning DOJ’s goal of holding individuals accountable for corporate fraud or other misconduct. While some of the guidelines set forth in the memorandum are statements of practices already being followed by DOJ, or by specific U.S. Attorney’s Offices, some of the measures are new and reflect an enhanced focus on DOJ’s goal of holding individuals criminally or civilly liable for corporate wrongdoing. The memo sets forth “six key steps” to accomplish this goal and further DOJ’s underlying policies of deterring future illegal activity, incentivizing change in corporate behavior, holding proper parties responsible for their actions, and promoting public confidence in the justice system.
First, the memo provides that, to be eligible to receive any credit for cooperating with the government in a civil or criminal investigation, a company must completely disclose to DOJ all relevant facts about individual misconduct, regardless of the individual’s position, status or seniority at the company. If a company provides incomplete information about individual employees’ misconduct, then the company’s cooperation will not be considered a mitigating factor in a criminal investigation and will not support, in the case of a prosecution, a cooperation-related reduction at sentencing. Likewise, where the company is not completely forthcoming about individual wrongdoing in a civil investigation, DOJ will not consider the company’s cooperation in negotiating a settlement agreement.
Second, the memo provides that both criminal and civil investigations should focus on individuals from the outset of the investigation, in order to discern the full extent of alleged misconduct, increase the likelihood of cooperation by individuals with knowledge of the misconduct, and maximize the chances that resolution of the investigation will include civil or criminal charges against both the company and culpable individuals.
Third, the memo emphasizes that DOJ criminal and civil attorneys should be in routine communication with one another, so that the DOJ can consider the full range of potential remedies to address alleged misconduct by individuals.
Fourth, the memo provides that, absent “extraordinary circumstances,” no corporate resolution will provide protection for criminal or civil liability for any individuals. Fifth, the memo states that DOJ attorneys should not resolve civil or criminal investigations of a corporation without a “clear plan” to resolve related individual cases. In addition, if a decision is made not to prosecute or proceed civilly against individuals who committed the misconduct, DOJ attorneys must memorialize and submit for approval the reasons for that decision.
Finally, the memo provides that civil prosecutors should consistently focus on individuals as well as the company, and evaluate the decision whether to sue an individual based on considerations beyond the individual’s ability to pay. The memo notes that, while DOJ attorneys may validly consider an individual corporate wrongdoer’s ability to satisfy a judgment in determining whether to pursue an action against that person, DOJ attorneys also should consider other goals and concerns in making this determination, including such things as the seriousness of a person’s misconduct, the person’ s past history, the ability to obtain and sustain a judgment, and the long-term deterrent effects of holding an individual accountable.
Federal Reserve Appoints Chicago Fed Official to Payments Security Post
On September 10, the Federal Reserve announced the appointment of Federal Reserve Bank of Chicago Senior Vice President Todd Aadland as its Payments Security Strategy Leader. Aadland will also continue to serve as a Senior Vice President and Chief Information Officer within the Federal Reserve Bank of Chicago’s Customer Relations and Support Office. In his new role, Aadland will lead the Federal Reserve System’s initiatives to address fraud risk, and promote the safety and security of the U.S. payment system. In addition, Aadland will serve as chairman of the Secure Payments Task Force, a group comprised of more than 170 payments stakeholders representing academia, government, and industry. Aadland’s appointment follows a Federal Reserve announcement naming a Faster Payments Strategy Leader tasked with improving the speed and efficiency of current and emerging payment systems.
New York AG Settles with Community Bank over Redlining Allegations
On September 10, New York Attorney General Eric Schneiderman announced a settlement agreement with a New York-based community bank to resolve allegations that the bank engaged in discriminatory mortgage lending practices by excluding potential borrowers who resided in predominantly African-American neighborhoods in the Buffalo area. Under terms of the agreement, the bank agreed to revise its consumer and commercial lending policies to eliminate minimum mortgage amount requirements, provide fair lending training, to expand its lending footprint into previously excluded areas, and to establish an $825,000 fund to promote new homeownership and affordable housing opportunities.