January 26, 2024

The Federal Trade Commission (FTC) announced that it issued orders to five companies requiring them to provide information regarding recent investments and partnerships involving generative artificial intelligence (AI) companies and major cloud service providers. The agency’s 6(b) inquiry will scrutinize corporate partnerships and investments with AI providers to build a better internal understanding of these relationships and their impact on the competitive landscape.  The compulsory orders were sent to Alphabet, Inc.,, Inc., Anthropic PBC, Microsoft Corp., and OpenAI, Inc. 

Secretary of the Treasury Janet Yellen delivered remarks on the state of the U.S. Economy in Chicago, Illinois. Secretary Yellen discussed the pandemic response and recovery and how to boost economic capacity and deliver economic growth for the future.

The Financial Crimes Enforcement Network (FinCEN) issued a final rule to reflect annual inflation adjustments to its civil monetary penalties as mandated by the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. This rule adjusts certain maximum civil monetary penalties within the jurisdiction of FinCEN to the amounts required by that Act.

The Internal Revenue Service and Office of the Comptroller of the Currency (OCC) are promoting January 26 as Earned Income Tax Credit (EITC) Awareness Day to increase the awareness of eligible working families about the benefits of the EITC.

The Securities and Exchange Commission (SEC) Office of Investor Education and Advocacy, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) jointly issued an investor article to make investors aware of the increase of investment frauds involving the purported use of AI and other emerging technologies.

SEC Chair Gary Gensler delivered remarks entitled “Time is Money. Time is Risk,” before the European Commission. Chair Gensler discussed the importance of clearing and settling, shortening the settlement cycle, and the transition to securities settlements of T+1 on May 28, 2024. 

The Securities and Exchange Commission announced that Northern Star Investment Corp. II, a special purpose acquisition company (SPAC), agreed to settle charges that it made misleading statements in forms filed with the SEC as part of its January 2021 initial public offering (IPO). The SEC’s order finds that Northern Star violated an antifraud provision of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Northern Star agreed to a cease-and-desist order and to pay a $1.5 million penalty in the event it closes a merger transaction.

The Commodity Futures Trading Commission (CFTC) Divisions of Market Oversight, Clearing and Risk, Market Participants, and Data and the Office of Technology Innovation issued a request for comment (RFC) to better inform them on the current and potential uses and risks of AI in the derivatives markets the CFTC regulates. Comments are due by April 24, 2024.

Read CFTC Commissioner Kristin Johnson’s statement here.

The CFTC is soliciting public comment on a substituted compliance application requesting that the Commission determine that certain CFTC-registered nonbank swap dealers located in the United Kingdom may satisfy certain Commodity Exchange Act capital and financial reporting requirements by being subject to, and complying with, comparable capital and financial reporting requirements under UK laws and regulations. The Institute of International Bankers, the International Swaps and Derivatives Association, and the Securities Industry and Financial Markets Association submitted the application. Comments are due by March 24, 2024. 

Read CFTC Chairman Rostin Behnam’s statement here.
Read CFTC Commissioner Kristin Johnson’s statement here.
Read CFTC Commissioner Christy Goldsmith Romero’s statement here.
Read CFTC Commissioner Caroline Pham’s statement here.

The CFTC Office of Customer Education and Outreach issued a customer advisory warning the public about AI scams. Customer Advisory: AI Won’t Turn Trading Bots into Money Machines explains how the scams use the potential of AI technology to defraud investors with false claims that entice them to hand over their money or other assets to fraudsters who misappropriate the funds and deceive investors.

U.S. Senators Michael Bennet (D-CO), Lindsey Graham (R-SC), Elizabeth Warren (D-MA), and Peter Welch (D-VT) wrote a letter to U.S. Senate Majority Leader Chuck Schumer (D-NY) to call for a new independent federal agency to establish oversight over large technology firms. The senators’ call follows Senator Schumer’s Senate AI Insight Forums, which underscored the need for a comprehensive approach to AI and the Big Tech companies currently dominating this sector.

The Consumer Financial Protection Bureau (CFPB) is proposing to block banks and other financial institutions from one potential source of new fee revenue – fees on transactions declined right at the swipe, tap, or click. The proposed rule would prohibit non-sufficient funds (NSF) fees on transactions that financial institutions decline in real time. These types of transactions include declined debit card purchases and ATM withdrawals, as well as some declined peer-to-peer payments. The CFPB’s proposal would cover banks, credit unions, and certain peer-to-peer payment companies.

Comments must be received on or before March 25, 2024.

The Federal Trade Commission charged online cash advance provider FloatMe and its co-founders with using empty promises of quick and free cash advances to entice consumers to join its service, only to fail to deliver the promised advance amounts, make it difficult to cancel, and discriminate against consumers who receive public assistance. FloatMe is also being charged with making baseless claims that cash advance limits would be increased by an algorithm or another automated system. Under the terms of a settlement order, FloatMe, as well as its co-founders Joshua Sanchez and Ryan Cleary, are required to provide $3 million to be used to refund customers, stop the company’s deceptive marketing, make it easier for consumers to cancel their subscriptions, and institute a fair lending program.

Need to catch up on what happened last week? Check out our January 24th Midweek Update here