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#1449611 - 09/29/10 03:30 PM APY Violation Cure
Anonymous
Unregistered

Our ops center made an error with a few of our CD's. The disclosures say that interest is compounded and credited annually, which it is.

The APY calculations, however, were based off a monthly compounding, throwing the APY out of tolerance.

My question is, what is our responsiblity to cure the violation? Do we have to figure out every affected CD, and pay extra interest equal to the wrong APY, or since the rate and the terms were correct on the CD, does that buy us some brownie points?

Thanks

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#1449628 - 09/29/10 03:40 PM Re: APY Violation Cure Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
You have APY disclosure violations. As long as you paid interest based on the contact terms - there is no reason to atttempt any cures.
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#1449709 - 09/29/10 04:39 PM Re: APY Violation Cure rlcarey
West Coast Comp Offline
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West Coast Comp
Joined: Jun 2010
Posts: 350
Lost in the rain.
RL,
You wouldn't rather provide the cure to eliminate the APY disclosure violation? If you pay the interest at the stated APY there is no violation. I guess I would want to know at least an estimate of how much it would cost to cure.
Just curious.
Last edited by West Coast Comp; 09/29/10 04:39 PM. Reason: Add comment.
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#1449713 - 09/29/10 04:43 PM Re: APY Violation Cure West Coast Comp
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
There are no regulatory based "cures" under Truth-in-Savings. There is no civil liability either.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1468528 - 11/16/10 08:50 PM Re: APY Violation Cure rlcarey
Anonymous
Unregistered

I need help on a similar situation - we disclosed the CD stating interest would be compounded at maturity, but we paid interest monthly so the APY was disclosed higher than it really should have been since it's not compounded at maturity. How to fix?

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#1468631 - 11/16/10 09:49 PM Re: APY Violation Cure Anonymous
John Burnett Online
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John Burnett
Joined: Oct 2000
Posts: 39,793
Cape Cod
If the disclosure was accurate based on the account description, the fact that you have allowed the customer to take monthly payouts does not affect the accuracy of the APY. And, as Randy said just above your post, there's no "cure" for this non-problem, anyhow. If you see something that needs fixing so it won't happen again, go ahead and clean up procedures. But as for this account, drop the matter, and move on to something worthy of concern.
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