Top Story Compliance Related

The federal bank regulatory agencies, the Federal Reserve Bank of San Francisco, and the Community Development Financial Institutions (CDFI) Fund will host the 2016 National Interagency Community Reinvestment Conference in Los Angeles February 8–10. The biennial conference offers participants from around the country the opportunity to learn about the Community Reinvestment Act (CRA) and to discuss best practices and emerging challenges in community development.

The Securities and Exchange Commission has announced that J.P. Morgan’s brokerage business agreed to pay $4 million to settle charges that it falsely stated on its private banking website and in marketing materials that advisors are compensated "based on our clients' performance; no one is paid on commission." An SEC investigation found that although J.P. Morgan Securities LLC did not pay commissions to registered representatives in its U.S. Private Bank, compensation was not based on client performance. See our Penalty Page entry for further information.

A list of 76 state nonmember banks recently evaluated by the FDIC for compliance with the Community Reinvestment Act (CRA) has been issued. The list covers evaluation ratings that the FDIC assigned to institutions in October 2015. Five received an outstanding rating, 69 earned a satisfactory evaluation, and two were rated "needs to improve."

The OCC has released the ratings received by seventeen national banks and federal savings associations recently examined for compliance with the Community Reinvestment Act. One was rated outstanding, and sixteen were rated satisfactory.

The OCC, FRB, and FDIC have published their fourth and final notice seeking comment on rules in the categories of Procedure, Safety and Soundness, and Securities. In addition, in this notice, the agencies are seeking comment on newly issued rules, including those issued pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the recently finalized domestic capital and liquidity rules, and any other final rules issued on or before December 31, 2015.

A Federal Trade Commission press release has announced that the Commission issued a policy statement yesterday explaining how established consumer protection principles apply to different advertising formats, including “native” ads that look like surrounding non-advertising content. In the "Enforcement Policy Statement on Deceptively Formatted Advertisements," the Commission lays out the general principles the Commission considers in determining whether any particular ad format is deceptive and violates the FTC Act. The policy statement affirms the long-standing consumer protection principle that advertisements and promotional messages that promote the benefits and attributes of goods and services should be identifiable as advertising to consumers. The policy statement explains that an ad’s format is deceptive if it materially misleads consumers about the ad’s commercial nature, including through any implied or express representation that it comes from a party other than the sponsoring advertiser.

The FTC also issued "Native Advertising: A Guide for Business," to help companies understand, and comply with, the policy statement in the context of native advertising. The business guidance gives examples of when disclosures are necessary to prevent deception and FTC staff guidance on how to make clear and prominent disclosures within the format of native ads.

The Bureau has released its December 2015 monthly consumer complaint snapshot, highlighting problems with money transfers. The report shows that consumers’ complaints about money transfers center around challenges in safely and efficiently sending money, and complaints about being victims of fraud. Some of the findings include consumers victimized by fraud, problems transferring money, lack of adequate customer service, issues resolving errors, and most-complained-about companies. The snapshot also highlights trends seen in complaints of all kinds coming from consumers in Georgia.

The SEC has announced that two J.P. Morgan wealth management subsidiaries have agreed to pay $267 million and admit wrongdoing to settle charges that they failed to disclose conflicts of interest to clients. An SEC investigation found J.P. Morgan Securities LLC (JPMS) and nationally chartered bank JPMorgan Chase Bank N.A. (JPMCB) preferred to invest clients in the firm’s own proprietary investment products without properly disclosing this preference. In a parallel action, JPMorgan Chase Bank agreed to pay an additional $40 million penalty to the U.S. Commodity Futures Trading Commission (CFTC). See our Penalty Page entry for details.

The federal banking agencies have announced their submission for publication of a notice in the Federal Register requesting comment on the fourth and final set of regulatory categories as part of their review to identify outdated or unnecessary regulations applied to insured depository institutions.The Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) requires the FFIEC, OCC, FDIC, and FRB to review their regulations at least every 10 years. The agencies also are required to categorize and publish the regulations for comment, and submit a report to Congress that summarizes any significant issues raised by the comments and the relative merits of such issues.

The Federal Reserve Board has announced that on December 11, 2015, it issued a consent Cease and Desist order against Habib Bank Limited, Karachi, Pakistan, and its New York, New York, branch. The order was issued because recent examination of the Branch conducted by the Federal Reserve Bank of New York (the “Reserve Bank”) and the New York State Department of Financial Services (“NYSDFS”) identified significant breakdowns in the Branch’s risk management and compliance with applicable federal laws, rules, and regulations relating to anti-money laundering (“AML”) compliance, including the Bank Secrecy Act; the rules and regulations issued thereunder by the U.S. Department of the Treasury (31 C.F.R. Chapter X); and the requirements of Regulation K of the Board of Governors to report suspicious activity and to maintain an adequate BSA/AML compliance program resulting in a compliance program violation; and because the bank and branch had failed to achieve full compliance with a December 19, 2006, Written Agreement by and between the bank, the branch, the Reserve Bank and the New York State Banking Department (predecessor of the NYSDFS).