Top Story Compliance Related

The CFPB has updated the compliance resources available on HMDA filing requirements. Added resources include a webinar discussing identifiers and other data points, and a chart that illustrates banks' options for collecting and reporting ethnicity and race information required under Regulation C.

The Securities and Exchange Commission has announced that Morgan Stanley Smith Barney has agreed to pay an $8 million penalty and admit wrongdoing to settle charges related to single inverse ETF [exchange-traded funds] investments it recommended to advisory clients. The SEC’s order found that Morgan Stanley did not adequately implement its policies and procedures to ensure that clients understood the risks involved with purchasing inverse ETFs. Among the order’s findings, Morgan Stanley failed to obtain from several hundred clients a signed client disclosure notice, which stated that single inverse ETFs were typically unsuitable for investors planning to hold them longer than one trading session unless used as part of a trading or hedging strategy. Morgan Stanley solicited clients to purchase single inverse ETFs in retirement and other accounts, the securities were held long-term, and many of the clients experienced losses.

The Federal Trade Commission has reported that GC Services Limited Partnership, a large debt collector based in Houston, Texas, that has been charged with using unlawful tactics to collect on federal student loans and other debts, will pay a $700,000 civil penalty under a settlement with the Commission. The complaint filed by the Justice Department on behalf of the Commission alleged that the company’s collectors left phone messages that illegally disclosed purported debts to others without their permission. GC Services employees also called consumers multiple times after being told that the person who answered did not owe the debt, that they had called the wrong person, or that the person they wanted could not be reached there. According to the Commission, GC Services also falsely claimed that it would take steps to prevent its employees from making unlawful calls to third parties to find a debtor. See our Penalty page for further information.

The Federal Trade Commission has sent to the CFPB a summary and the full text of its report of 2016 work on debt collection practices for inclusion in the CFPB’s annual report to Congress on the Fair Debt Collection Practices Act (FDCPA), as required by the Dodd-Frank Act. The FTC and the CFPB share FDCPA enforcement responsibilities. In 2016, the Commission:

• filed or resolved 12 cases against 61 defendants, and obtained nearly $70 million in judgments
• banned 44 companies and individuals that engaged in serious and repeated violations of law from ever working in debt collection again
• secured successful summary judgment decisions in three litigated matters, resulting in orders banning defendants from the debt collection industry

FinCEN has published at 82 FR 9109 in the Federal Register a notice and request for comments on a proposed update and revisions to the collection of information filings by financial institutions required to file such reports under the Bank Secrecy Act (“BSA”). This notice does not propose any new regulatory requirements or changes to the requirements related to suspicious activity reporting. The data fields reflect the filing requirement for all filers of SARs under the BSA. Most of the proposed changes would alter the "checklist" of violations in Part II of the filings, including the addition of several fields related to cyber events. Comments are due by April 3, 2017.

OFAC has designated Venezuelan national Tareck Zaidan El Aissami Maddah (El Aissami) as a Specially Designated Narcotics Trafficker (SDNT) pursuant to the Kingpin Act for playing a significant role in international narcotics trafficking. El Aissami is the Executive Vice President of Venezuela. El Aissami's primary frontman, Venezuelan national Samark Jose Lopez Bello (Lopez Bello), was also designated. OFAC further designated or identified as blocked property 13 companies owned or controlled by Lopez Bello or other designated parties that comprise an international network spanning the British Virgin Islands, Panama, the United Kingdom, the United States, and Venezuela. Five of those entities are LLCs registered in Florida. See our OFAC Update for additional information.

The OCC has issued Bulletin 2017-10 on its publication on January 23, 2017, of a final rule that removes outdated or otherwise unnecessary provisions in certain rules, reducing the regulatory burden on national banks and federal savings associations. The rule, which becomes effective April 1, 2017, also integrates the OCC’s national bank and FSA rules relating to fidelity bonds, Securities Exchange Act of 1934 disclosures, securities offering disclosures, and insider and affiliate lending. The rule is part of the results of the OCC's review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996.

The Federal Reserve, OCC, and FDIC have issued revised macroeconomic scenarios for their 2017 stress testing program to correct a data series error. The scenarios previously released contained incorrect historical values for the BBB corporate yield in 2016. As a result of the correction, BBB corporate yields peak at slightly lower levels in the severely adverse and adverse scenarios. The correction also lowered yields in the baseline scenario, but the revision is more modest than for the other scenarios.

The Federal Trade Commission has provided the Consumer Financial Protection Bureau with an annual summary of its activities enforcing the Equal Credit Opportunity Act (ECOA).

The OCC has issued a proclamation allowing national banks and federal savings associations affected by severe winter weather in the northeastern United States to close, "for as long as deemed necessary for bank operation or public safety."