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A majority of a three-member panel of the U.S. Court of Appeals for the Fifth Circuit has vacated the Department of Labor's Fiduciary Rule in an opinion filed March 15, 2018 in the matter of Chamber of Commerce of the United States of America et al v. Unites States Department of Labor et al. Three business groups had filed suits challenging the Fiduciary Rule finalized by the Department in April 2016.

The Fiduciary Rule is a collection of seven different rules the reinterpret the term "investment advice fiduciary" and redefine exemptions to provisions concerning fiduciaries that appears in the Employee Retirement Income Security Act of 1974 (ERISA). The stated purpose of the new rules is to regulate in an entirely new way hundreds of thousands of financial service providers and insurance companies in the trillion dollar markets for ERISA plans and individual retirement accounts (IRAs). The business groups’ challenge proceeds on multiple grounds, including (a) the Rule’s inconsistency with the governing statutes, (b) DOL’s overreaching to regulate services and providers beyond its authority, (c) DOL’s imposition of legally unauthorized contract terms to enforce the new regulations, (d) First Amendment violations, and (e) the Rule’s arbitrary and capricious treatment of variable and fixed indexed annuities.

Although the district court rejected each of those challenges, the appeals court panel found merit in several of them, and ordered that the Rule be vacated entirely. Whether the Department of Labor will appeal the decision has not been determined.

The CFPB has published a notice in today's Federal Register soliciting applications for membership on its Consumer Advisory Board, Community Bank Council, and Credit Union Advisory Council. Membership of the Board and Councils includes representatives of consumers, communities, the financial services industry and academics. Appointments to the Board are typically for three years and appointments to the Councils are typically for two years. The Bureau expects to announce the selection of new members in September 2018.

The NCUA Board held its third open meeting of 2018 at the agency’s headquarters on Thursday, and unanimously approved two items:

• An advance notice of proposed rulemaking seeking stakeholder comments on ways to streamline, clarify, and improve the standard federal credit union bylaws.
• A proposal to adopt suspension and debarment procedures to establish an administrative process protecting the federal government’s interest in only doing business with presently responsible contractors.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has designated five entities and 19 individuals under the Countering America’s Adversaries Through Sanctions Act (CAATSA) as well as Executive Order (E.O.) 13694, “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” as amended, and codified pursuant to CAATSA.

OFAC's action counters Russia’s continuing destabilizing activities, ranging from interference in the 2016 U.S. election to conducting destructive cyber-attacks, including the NotPetya attack, a cyber-attack attributed to the Russian military on February 15, 2018, in statements released by the White House and the British Government. Treasury reports this cyber-attack was the most destructive and costly cyber-attack in history. The attack resulted in billions of dollars in damage across Europe, Asia, and the United States, and significantly disrupted global shipping, trade, and the production of medicines. Additionally, several hospitals in the United States were unable to create electronic records for more than a week.

As a result of OFAC's action, all property and interests in property of the designated persons subject to U.S. jurisdiction are blocked, and U.S. persons are generally prohibited from engaging in transactions with them. For identification of the sanctioned individuals and entities, see our OFAC Update.

The U.S. Senate voted 67 to 31 to pass S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, late on Wednesday evening, March 14, 2018, reports NMP, the National Mortgage Professional Magazine. The bill now goes to the House of Representatives for consideration, where the chairman of the House Financial Service Committee, Jeb Hensarling, is reported by The Hill to have said he's not holding talks with key senators on the bill. Hensarling said he does expect a conference committee to be formed, but House conservatives want any final bill to include more input from the House membership.

In the meantime, the House has passed the Tailor Act, which, if enacted, would require regulators to tailor their actions to meet characteristics of the many different banks they supervise.

The Senate bill includes provisions that would, among other things --

• Provide Qualified Mortgage designations for mortgages held in portfolio by banks with less than $10 billion in assets
• Increase the threshold for designation as a systemically important financial institution from $50 billion to $250 billion in assets
• End stress testing for banks under $100 billion in assets
• Simplify community bank capital calculations
• Provide appraisal requirement relief for smaller mortgages in rural areas
• Lengthen the exam cycle for community banks
• Provide for free security freezes of credit files held at nationwide credit bureaus
• Make permanent the temporary changes to the SCRA extending the "90 day" period in sections 303(b) and 303(c) to "one year."
• Provide for expanded relief from HPML escrow requirements for depository institutions

If either of these bills is enacted, it will, of course, include different final wording than that currently reported.

The OCC will host two workshops in Indianapolis at the Crowne Plaza Indianapolis Airport, April 17 and 18, for directors of national community banks and federal savings associations supervised by the OCC.

• The Compliance Risk workshop on April 17 combines lectures, discussion, and exercises on the critical elements of an effective compliance risk management program. The workshop also focuses on major compliance risks and critical regulations.
• The Operational Risk workshop on April 18 focuses on the key components of operational risk—people, processes, and systems.

The CFPB has issued a Request for Information (RFI) on its adopted regulations and its new rulemaking authorities. This is the eighth in a series of RFIs announced by Acting Director Mick Mulvaney in his "call for evidence" that the Bureau is fulfilling its proper and appropriate functions to best protect consumers. In this RFI, the Bureau is "seeking comments and information from interested parties to assist the Bureau in considering whether it should amend any rules it has issued since its creation or issue rules under new rulemaking authority provided for by the Dodd-Frank Act." Publication is expected on or about March 19, and a 90-day comment period will follow.

• UPDATE: This RFI is scheduled for publication on March 21, with a comment period ending 6/19/2018.

The CFPB has posted an article indicating that individuals who weren’t able to access the money on their RushCards in October 2015, but no longer have an active RushCard account, will have redress checks mailed to them. And earlier this month, people who were unable to access the money on their RushCards in October 2015, and still have an active RushCard, received a credit to their account.

• February 1, 2017 Penalties page: Mastercard and UniRush pay $13M for botched conversion
  

The Securities and Exchange Commission has charged foreign affiliates of KPMG, Deloitte & Touche, and BDO (Binder Dijker Otte) for their involvement in audit work that circumvented the full oversight of the Public Company Accounting Oversight Board (PCAOB). The firms agreed to settle the charges by paying penalties or disgorging their profits from the audits. Without admitting or denying the findings, BDO Canada agreed to pay a $50,000 penalty, KPMG in South Africa agreed to pay a $100,000 penalty, Deloitte in Zimbabwe agreed to pay disgorgement and interest totaling $99,057, and KPMG in Zimbabwe agreed to pay disgorgement and interest totaling $141,305.

The FDIC has posted a notice of the open-session meeting of its Board of Directors, to be held on March 20, 2018, to consider the following topics, among others:

• Memorandum and resolution re: Notice of Proposed Rulemaking: Annual Stress Test – Applicability Transition for Covered Banks with $50 Billion or More in Assets; Technical and Conforming Changes.
• Memorandum and resolution re: Regulatory Capital Rules: Removal of Certain Capital Rules That Are No Longer Effective Following the Implementation of the Revised Capital Rules [Part 325].
• Memorandum and resolution re: Technical Amendments to Assessment Rules.
• Memorandum and resolution re: Notice of Proposed Rulemaking Regarding Fiduciary Powers of State Savings Associations and Consent Requirements for the Exercise of Trust Powers.
• Memorandum and resolution re: Review of Regulations Transferred from the Former Office of Thrift Supervision: Part 390, Subpart I – Consumer Protection in Sales of Insurance [Final Rule].
• Memorandum and resolution re: Final Rule regarding Removal of OTS Regulations Re: Minimum Security Procedures Amendments (Removal of part 391, subpart A, entitled Security Procedures and amend FDIC regulations to be applicable to state savings associations).