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Top Story Compliance Related

10/15/2021

SEC reopens comment period on clawbacks proposal

The Securities and Exchange Commission has reopened the comment period on proposed rules for listing standards for the recovery of erroneously awarded compensation. The reopened comment period permits interested parties to submit further comments and data on rule amendments the Commission first proposed in 2015 as well as comments in response to questions being raised by the Commission now in its reopening release. In addition, interested parties may comment on developments since 2015 when the proposing release was issued, including trends in accounting practices and the potential economic and other effects of the proposal in light of any such developments.

“I support today’s action to reopen comment on the Dodd-Frank Act rule regarding clawbacks of incentive-based executive compensation,” said SEC Chair Gary Gensler. “I believe we have an opportunity to strengthen the transparency and quality of corporate financial statements, as well as the accountability of corporate executives to their investors.”

The public comment period will remain open for 30 days following publication of the release in the Federal Register.

10/14/2021

SEC amends filing fee disclosure and payment methods

The SEC has adopted amendments to modernize filing fee disclosure and payment methods. Operating companies and investment companies (funds) pay filing fees when engaging in certain transactions, including registered securities offerings, tender offers, and mergers and acquisitions. The amendments revise most fee-bearing forms, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format. The amendments also add new options for ACH and debit and credit card payment of filing fees and eliminate infrequently used options for filing fee payment via paper checks and money orders. The amendments are intended to improve filing fee preparation and payment processing by facilitating both enhanced validation through filing fee structuring and lower-cost, easily routable payments through the ACH payment option.

The amendments generally will be effective on January 31, 2022, but the changes adding options for filing fee payment via ACH and debit/credit card and eliminating the option for payment by paper checks and money orders will be effective May 31, 2022. The Commission's Fact Sheet on the changes includes additional implementation details.

10/14/2021

FTC warns advertisers: honest opinions only

Last week, for-profit colleges and universities received warnings from the Federal Trade Commission. Yesterday, the FTC delivered a shot across the bow of advertisers. The Commission sent a warning letter with a Notice of Penalty Offenses Concerning Endorsements and Testimonials to more than 700 companies with the message that they could incur significant civil penalties—up to $43,792 per violation—if they use endorsements in ways that run counter to prior FTC administrative cases.

The Notice sent to the companies outlines a number of practices that the FTC determined to be unfair or deceptive in prior administrative cases. These include, but are not limited to:

  • falsely claiming an endorsement by a third party
  • misrepresenting whether an endorser is an actual, current, or recent user
  • using an endorsement to make deceptive performance claims
  • failing to disclose an unexpected material connection with an endorser
  • misrepresenting that the experience of endorsers represents consumers’ typical or ordinary experience

The Commission's press release included a disclaimer that a company's inclusion on the list of letter recipients does not suggest it has engaged in deceptive or unfair conduct.

10/13/2021

Fed bans former Banco Popular manager

The Federal Reserve Board of Governors has issued an Order of Prohibition Upon Consent to Ileana Acevedo Diaz after finding that, between 2017 and 2019, while employed as a branch manager of Banco Popular de Puerto Rico (San Juan), Acevedo Diaz made unauthorized transactions in a customer's individual retirement accounts, causing a loss of approximately $32,000 for the bank.

The bank terminated Acevedo Diaz on August 12, 2020, and she is no longer involved in banking. The Order bars her from participating in any manner in the business of banking.

10/13/2021

Victims of tech support scheme to receive checks

The Federal Trade Commission is sending 31,075 checks totaling nearly $300,000 to people who were deceived by Elite IT Partners Inc. into paying for costly and unnecessary computer repair services.

In a complaint filed in 2019, the FTC alleged that Elite IT used Internet ads to target consumers looking for help recovering their email passwords. Consumers who responded to Elite’s ads were encouraged to provide their names, email addresses, and phone numbers. Elite’s telemarketers then reached out to consumers—often pretending to be associated with well-known companies like Microsoft and Yahoo!—and pressured consumers to provide access to their computers. The telemarketers ran bogus “diagnostic” tests, claimed consumers’ computers and personal information were in imminent danger, and convinced many consumers to pay large sums for immediate cleaning of their computers, antivirus software, and ongoing technical support services. The FTC alleged that the scheme affected tens of thousands of consumers.

10/13/2021

DHS enforcement strategy to protect workers

DHS Secretary Mayorkas has directed U.S. Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and Citizenship and Immigration Services (USCIS) to take actions to promote a fair labor market by supporting more effective enforcement of wage protections, workplace safety, labor rights, and other employment laws and standards. He has issued a memorandum to ICE, CBP, and USCIS to develop and update policies to enhance the Department’s impact in supporting the enforcement of employment and labor standards. The agencies must also develop strategies for prioritizing workplace enforcement against unscrupulous employers and, through the exercise of prosecutorial discretion, facilitate the participation of vulnerable workers in labor standards investigations.

10/12/2021

CFPB files against American Advisors Group

The CFPB on Friday announced it has filed a complaint and proposed consent order alleging that American Advisors Group (AAG) used inflated and deceptive home estimates to lure consumers into taking out reverse mortgages. The CFPB also alleges that AAG’s deceptive conduct violated a 2016 administrative consent order that addressed AAG’s deceptive advertising of reverse mortgages. If entered by the court, the proposed consent order would prohibit AAG from future unlawful conduct and require AAG to pay $173,400 in consumer redress and a $1.1 million civil money penalty.

American Advisors Group, based in Irvine, California, is one of the nation’s leading providers of reverse mortgages. A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for paying taxes, insurance, and home maintenance, among other obligations.

10/12/2021

FTC orders repeat offender to pay

The Federal Trade Commission has announced Resident Home LLC and owner Ran Reske will pay $753,000 to settle Commission charges that they made false, misleading, or unsupported advertising claims that their imported DreamCloud mattresses were made from 100% USA-made materials.

Resident Home LLC is the parent of Nectar Brand LLC (better known as Nectar Sleep), a company that had previously agreed to a 2018 FTC administrative order resolving allegations that it falsely advertised imported mattresses as “Assembled in USA.” Following the 2018 order, Reske, under penalty of perjury, stated that Resident had never made U.S.-origin claims about its DreamCloud mattress. This proved to be untrue. The proposed order entered into on Friday incorporates the terms of the 2018 order, orders the payment of $753,000, and expands the application of the 2018 order to all the entities under Reske's control.

10/08/2021

Victims of phantom debt collector to receive refunds

The Federal Trade Commission has announced it is returning $772,512 to consumers who were targeted by a debt collector who unlawfully brokered and collected fake debts that the consumers did not owe.

According to the complaint filed by the FTC and the New York Attorney General, Hylan Asset Management, LLC, and its owners, Andrew Shaevel and Jon E. Purizhansky, bought, placed for collection, and sold lists of phantom debts, including debts that were fake or imposed on consumers without their knowledge or consent. Hylan referred the fake debts to several collection agencies, including Worldwide Processing Group, LLC, which then illegally collected on them. Hylan continued to buy the portfolios and distribute them to third parties for collection even though it was repeatedly notified that consumers did not owe many of the debts, the FTC alleged. The defendants agreed to settle the case in 2019. As part of the settlement, they agreed to be banned permanently from the debt collection industry and surrendered funds to the FTC. The agency is using that money to send checks averaging $539 to 1,432 consumers.

10/08/2021

FCC sets interim fees for Reassigned Numbers Database

The Federal Communication Commission has issued Public Notice DA 21-1240 announcing interim usage charges for the Commission's Reassigned Numbers Database (RND). Callers and caller agents will be able to use the Database to determine whether a telephone number has been reassigned from the consumer they intend to reach, thus allowing them to avoid calling consumers with reassigned numbers who may not wish to receive their call. The system is in beta test; the Database is expected to be available for full use on November 1, 2021.

The RND will offer six subscription tiers: Extra Small, Small, Medium, Large, Extra Large, and Jumbo. Those wishing to use the RND may sign up for a one-month subscription, a three-month subscription, or a six-month subscription. The RND Administrator expects to offer an annual subscription option in the future, as well.

The notice includes a table of each subscription size and duration. It ranges from $10 for a one-month subscription to the extra small tier (up to 1,000 queries) to $210,600 for a six-month subscription to the jumbo tier (up to 180 million queries).

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