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Exception Tracking Spreadsheet (TicklerTrax™)
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Top Story Compliance Related

01/07/2022

SEC awards whistleblower $13M+

The Securities and Exchange Commission yesterday announced it has approved an award of more than $13 million to a whistleblower whose information and assistance prompted the opening of an investigation and significantly contributed to the success of an SEC enforcement action. The whistleblower promptly alerted SEC staff to an ongoing fraud and provided extensive assistance to SEC staff by meeting in person and helping the staff understand the mechanics of the fraudulent scheme. The whistleblower’s information also helped the Commission obtain emergency relief to minimize investor losses.

The SEC has awarded approximately $1.2 billion to 238 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards.

01/06/2022

Phony CD scammer charged

The Securities and Exchange Commission yesterday announced it has charged Allen C. Giltman, a former registered investment professional, with allegedly participating in a long-running fraudulent scheme to lure investors into buying fictitious certificates of deposit. The scheme resulted in victims, primarily older adults investing their retirement savings, losing at least $40 million.

According to the SEC’s complaint, Giltman purchased internet ads targeting investors searching for CDs with high interest rates. The ads allegedly included links to phony websites Giltman helped create, many of which mimicked those of existing financial institutions, in order to offer investors fictitious CDs, which the websites falsely claimed were FDIC-insured. As alleged in the complaint, when investors called the phone numbers listed on the websites, Giltman impersonated registered representatives at the legitimate firms and instructed victims to wire funds to domestic or foreign bank accounts, purportedly to purchase the CDs. The SEC alleges that investor funds were then misappropriated as part of the scheme, with Giltman receiving a portion of the funds. The SEC also alleges that Giltman used a variety of methods to evade detection, including attempting to anonymize his digital footprint by using the identities of victims to register for online services used in the scheme.

01/06/2022

Merchant cash advance providers banned and fined

The Federal Trade Commission has announced that two of the defendants behind an alleged small business financing scheme, RAM Capital Funding, LLC and its owner Tzvi Reich, will be permanently banned from the merchant cash advance and debt collection industries, and required to pay $675,000 to settle Commission charges that they used deceptive and illegal means to seize assets from small businesses, non-profits, and religious organizations.

Merchant cash advances are a type of alternative small business financing. Generally speaking, merchant cash advance companies provide funds to businesses in exchange for a percentage of the businesses’ revenue. Typically, a merchant cash advance company will make daily withdrawals from the business’s bank account until the obligation has been met.

The FTC alleged that since 2015, the defendants deceived small businesses and other organizations in violation of the FTC Act and the Gramm-Leach-Bliley Act by requiring personal guarantees and upfront fees from consumers after representing they wouldn’t make these demands, providing less funding to consumers than promised, and by debiting more from consumers’ bank accounts than they said they would. The agency also alleged that the defendants made unauthorized withdrawals from consumers’ accounts and used unfair collection practices, including sometimes threatening physical violence. In addition, the FTC alleged that the defendants illegally weaponized “confessions of judgment,” contractual terms that allowed defendants to pursue customers’ personal assets in court and obtain uncontested judgments against them. As part of the settlement, the defendants are being ordered to vacate any judgments against their former customers and to release any liens against their customers’ property. The proposed order would also ban these defendants from making these and similar misrepresentations, and from further violations of the Gramm-Leach-Bliley Act.

01/06/2022

CFPB zings national credit reporting agencies

The CFPB yesterday took aim at the "Big Three" consumer credit reporting agencies—Equifax, Experian, and TransUnion, releasing a new analysis that reveals how changes in complaint responses provided by nationwide consumer reporting companies resulted in fewer meaningful responses and less consumer relief. In 2021, reports the CFPB, Equifax, Experian, and TransUnion together reported relief in response to less than 2% of covered complaints, down from nearly 25% of covered complaints in 2019.

According to the CFPB—

  • Consumers submitted more than 700,000 complaints to the CFPB regarding Equifax, Experian and TransUnion from January 2020 through September 2021, which represented more than 50% of all complaints received by the agency for that period.
  • Consumers submit more complaints about inaccurate information on their credit and consumer reports than about any other problem.
  • Consumers most frequently assert that the inaccurate information belongs to someone else, and consumers often describe being victims of identity theft.

The CFPB forwards consumer complaints about Experian, Equifax and TransUnion to the companies when the consumer appears to have previously attempted to fix the problem with the companies directly. The companies are then required to report their determinations and actions for these complaints to the CFPB. The Bureau's report shows—

  • Equifax most often promised to open investigations and send the results to the consumers at later dates, but it would fail to provide the CFPB with the outcomes of the investigations.
  • TransUnion made similar promises and frequently failed to provide the outcomes of investigations to the CFPB. It often stated it would take no action on complaints because it believed the complaints were submitted by third parties.
  • For many complaints, Experian frequently stated it would take no action because it believed the complaints were submitted by third parties, however, it did respond to the remaining complaints with substantive responses.
  • Equifax, Experian, and TransUnion relied heavily on template complaint responses instead of providing meaningful and thorough responses to consumers, despite having up to 60 calendar days to respond.
  • Beginning in early 2020, Experian and TransUnion stopped providing substantive responses to consumers’ complaints if they suspected that a third-party was involved in submitting a complaint.
  • In many instances, Equifax and TransUnion promised to investigate but failed to provide the outcomes of their investigations to the CFPB and instead stated that they would forward the complaints to their “dispute channel.”

Related link:
CFPB Annual report of credit and consumer reporting complaints

01/06/2022

OFAC sanctions Milorad Dodik and media outlet

Yesterday, OFAC designated Milorad Dodik, a member of the Presidency of Bosnia and Herzegovina, as well as one entity under his control, Alternativna Televizija d.o.o. Banja Luka, his personal media outlet, in response to Dodik’s corrupt activities and continued threats to the stability and territorial integrity of Bosnia and Herzegovina.

This is OFAC's first action under Executive Order 14033 (June 8, 2021).

For identification specifics, see yesterday's BankersOnline OFAC Update.

01/05/2022

President lists nominees

The White House Briefing Room has issued a statement listing presidential nominations sent to the Senate. Among those listed were:

  • Alvaro M. Bedoya, of Maryland, to be a Federal Trade Commissioner for the term of seven years from September 26, 2019.
  • Lael Brainard, of the District of Columbia, to be Vice Chairman of the Board of Governors of the Federal Reserve System for a term of four years.
  • Todd M. Harper, of Virginia, to be a Member of the National Credit Union Administration Board for a term expiring April 10, 2027. (Reappointment)
  • Jerome H. Powell, of Maryland, to be Chairman of the Board of Governors of the Federal Reserve System for a term of four years. (Reappointment)
  • Sandra L. Thompson, of Maryland, to be Director of the Federal Housing Finance Agency for a term of five years.

01/05/2022

FDIC lists CRA evaluation ratings

The FDIC on Tuesday released a list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act whose evaluation ratings were assigned in October 2021.

Of the 41 banks listed, 38 received evaluation ratings of Satisfactory. We congratulate the three banks that earned Outstanding evaluation ratings:

01/04/2022

OCC releases CRA evaluation ratings

The OCC on Monday released a list of 23 Community Reinvestment Act performance evaluations that became public in December 2021. The evaluations were of national banks, federal savings associations, and insured federal branches of foreign banks.

Of the 23 evaluations, 16 were rated Satisfactory, and the evaluations of these seven institutions received Outstanding ratings:

01/04/2022

Airbnb Payments settles with OFAC

Airbnb Payments, Inc., a registered money services business incorporated in Delaware and headquartered in San Francisco, California, and a wholly owned subsidiary of Airbnb, Inc., has agreed to pay $91,172.29 to settle its potential civil liability for apparent violations of sanctions against Cuba administered by the Office of Foreign Assets Control. This activity included payments related to guests traveling for reasons outside of OFAC’s authorized categories as well as a failure to keep certain required records associated with Cuba-related transactions. The settlement amount reflects OFAC’s determination that Airbnb Payments’ apparent violations were voluntarily self-disclosed and were non-egregious.

01/03/2022

FDIC November enforcement actions announced

The FDIC has released a list of orders of administrative enforcement actions taken against banks and individuals in November 2021. Among those orders were:

  • an order that Renasant Bank, Tupelo, MS, pay a civil money penalty of $132,000 for violations of the Flood Disaster Protection Act
  • an order that Nebraska State Bank, Oshkosh, NE, pay a civil money penalty of $6,500 for violations of the Flood Disaster Protection Act
  • an order that William P. Durell, formerly a vice president and commercial lender of South State Bank, Columbia, South Carolina (now South State Bank, National Association, Winter Haven, Florida), pay a $2,500 civil money penalty for having downloaded files with sensitive bank information from the banks systems and removed them from the bank, causing the bank to incur more than minimal expenses to recover the information.
  • a removal and prohibition order issued to Susan W. Wright, a former office manager of Summit Community Bank, Moorfield, WV, after a finding that she processed 14 unauthorized withdrawals from two customers' accounts and failed to file records of the withdrawals, resulting in a loss of $26,380 to the bank.
  • a removal and prohibition order issued to Shelley M. Bayless, a former teller at Balboa Thrift and Loan Association, Chula Vista, CA, after a finding she had misappropriated funds from two certificates of deposits of a bank customer.

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