April 5, 2024

Securities and Exchange Commission (SEC) Chair Gary Gensler, Division of Enforcement Director Gurbir Grewal, Division of Enforcement Deputy Director Sanjay Wadhwa, and Commissioners Mark Uyeda and Hester Peirce delivered remarks at the SEC Speaks Conference. Speakers discussed the Commission’s Climate Rule, the materiality requirement for mandated disclosures, clearance and settlement, exchanges and alternative trading systems, the national market system, and SEC engagement with the public.

Division of Enforcement Director Grewal discussed cryptocurrency markets, asserting that the SEC has “clearly and consistently” applied the Howey test and its progeny to protect investors in the crypto space, and stating that the SEC has dealt with “a decade’s worth of verbal gymnastics that are just a backhanded way of saying, ‘we want a different set of rules than those that apply to everyone else,’” and “a decade’s worth of arguments that have served as nothing more than a distraction from the very real issues and risks that the crypto markets present for the investing public.”

Commissioner Peirce also addressed cryptocurrencies, calling Staff Accounting Bulletin (SAB) 121 and related guidance a “pernicious weed” in what she refers to as the SEC’s “secret garden” – the maze of staff guidance that serves to define practices across the securities industry in a way that may be inconsistent with a plain reading of the rulebook. Commissioner Peirce further stated that the SEC’s enforcement actions regarding cryptocurrencies are scaring people off from meeting with the SEC, and that the SEC’s “announcement of a large ramp-up in its cyber- and crypto-enforcement unit, repeated assertions that the crypto industry is lawless, and treatment of cyber-incidents as fertile ground for enforcement actions add to these fears.”

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra delivered remarks at the White House on Data Protection and National Security. Director Chopra discussed some of the issues outlined in the Executive Order to Protect Americans’ Sensitive Personal Data signed by President Biden in February, highlighting the Bureau’s proposals to amend the Fair Credit Reporting Act, to ensure greater accountability for so-called “data brokers.”

Federal Reserve Board (FRB) Governor Michelle Bowman delivered a speech entitled “Bank Mergers and Acquisitions, and De Novo Bank Formation: Implications for the Future of the Banking System.” Governor Bowman discussed the forces that will shape the future of the banking system, entry into the banking system, bank mergers and acquisitions, and the state of competition including both the direct and indirect competition banks experience and how regulators measure and assess competition.

FRB Governor Bowman delivered remarks entitled “Bank Liquidity, Regulation, and the Fed’s Role as Lender of Last Resort,” at The Roundtable on the Lender of Last Resort: The 2023 Banking Crisis and COVID, sponsored by the Committee on Capital Markets Regulation. Governor Bowman discussed the bank regulatory framework, including capital regulation, the approach to supervision, and the role of tailoring, and addressed the appropriate role of the Federal Reserve in providing liquidity to the U.S. banking system and its role as the “lender of last resort” through the discount window and authority under section 13(3) of the Federal Reserve Act.

The FRB announced that it is accepting applications from individuals who wish to be considered for membership on the Community Advisory Council (CAC). The CAC was formed in 2015 and advises the Board on issues affecting consumers and communities, complementing two of the Board’s other advisory councils.

A federal judge rejected Wyoming-based Custodia Bank’s argument that it is entitled to a Federal Reserve master account and membership with the Fed. Judge Scott Skavdahl denied Custodia’s motion for judgment, writing that federal laws do not require the nation’s central bank to give every eligible depository institution access to its master account system, nor did Custodia  provide evidence to suggest the FRB influenced a regional branch of the Fed to deny its application for an account.

The Federal Deposit Insurance Corporation (FDIC) Board of Directors approved the selection of E. Marshall Gentry as Deputy to the Chairman and Chief Financial Officer (CFO). Mr. Gentry succeeds Bret D. Edwards, who retired in February. Mr. Gentry previously served as the FDIC’s Chief Risk Officer and Director of the Office of Risk Management and Internal Controls (ORMIC) since April 2018.

The CFPB and Federal Trade Commission (FTC) filed an amicus brief in the U.S. Court of Appeals for the Eleventh Circuit addressing consumer reporting companies’ obligation to correct errors. The case is Nelson v. Experian Information Solutions, Inc.

The SEC’s Office of Investor Education and Advocacy (OIEA) announced  its theme for April’s National Financial Capability Month, “What does your financial future look like? Having a plan can help answer the question.” During the month of April, SEC leadership and staff will highlight the importance of creating a saving and investing plan to help investors meet their financial goals, and will encourage them to take advantage of the free tools and resources available on Investor education events will take place across the U.S. with various audiences, including students, underrepresented communities, older investors, and the military.

The Office of the Comptroller of the Currency (OCC) also published a news release promoting National Financial Capability Month and encouraging national banks and federal savings associations to support this annual commemoration by recommitting their focus on improving the financial capability and financial health of their customers. 

SEC Office of the Advocate for Small Business Capital Formation Director Stacey Bowers delivered remarks entitled “We Will Rock You: The Small but Mighty Office of the Advocate for Small Business Capital Formation.” Director Bowers discussed the role of the office, resources the office provides for small businesses, and the office’s Annual Report for Fiscal year 2023.

The Commodity Futures Trading Commission (CFTC) issued an order simultaneously filing and settling charges against Australia and New Zealand Banking Group Ltd. (ANZ), a financial services firm provisionally registered as a swap dealer for violating its supervision obligations for failing to ensure its spoofing surveillance tool was operating effectively. ANZ admitted the facts in the order. The order requires ANZ to pay a $500,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC regulations as charged.

Senator Jeanne Shaheen (D-NH), Chair of the U.S. Senate Committee on Small Business and Entrepreneurship, wrote to Small Business Administration (SBA) Administrator Isabel Guzman to raise concerns regarding the agency’s decision to move forward with the approval of a Small Business Lending Company (SBLC) license for Funding Circle, a company whose U.K.-owned parent recently stated that it is seeking to sell its U.S business. In the letter, Sen. Sheehan wrote that “awarding a license to a company that is preemptively seeking to offload its operation even before receiving its full approval or making a single SBA loan would be unprecedented and, in my view, extremely unwise.”

The Consumer Financial Protection Bureau (CFPB) published their 2023 ​​Consumer Response Annual Report. The report found increased complaints in credit reporting, widespread reports of fraud, issues with debt collection practices, and problems with student loan payments resumption. In the report, the CFPB encourages the use of the complaint data as a  tool for improvements and suggests that integrating the feedback into  operational review processes can help companies in quickly identifying and resolving issues.

Need to catch up on what happened last week? Check out our March 29th Midweek Update here