March 20, 2024

The Consumer Financial Protection Bureau (CFPB) published a blog providing input on proposed New York State legislative reforms that would strengthen the state’s consumer protection laws on abusive corporate conduct, highlighting the importance of bans on abusive conduct and emphasizing that the CFPB does not have a monopoly on policing abusive conduct. The CFPB also wrote letters to New York Governor Kathy Hochul, State Senate leaders, and State Assembly leaders sharing how the ban would arm the state with more tools to combat corporate misconduct.

Read the letter to Governor Hochul here.
Read the letter to State Senate leaders here.
Read the letter to State Assembly leaders here.

Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki attended the Financial and International Business Association’s (FIBA) annual anti-money laundering conference to discuss regulatory expectations and best practices to prevent financial crimes. Director Gacki participated in a fireside chat during which she discussed several initiatives FinCEN has undertaken that are intended to enhance transparency in the U.S. financial system, including the launch of the beneficial ownership information registry. She also highlighted two proposed rulemakings that FinCEN has made public this year—involving reporting requirements for investment advisers and non-financed residential real estate purchases.

The Federal Deposit Insurance Corporation (FDIC) issued letters demanding three companies and certain associated parties cease and desist from making false and misleading statements about FDIC deposit insurance. The FDIC is demanding that PrizePool, Inc., AmeriStar, LLC, and HighLine Gold, LLC take immediate corrective action to address the false or misleading statements. Based upon evidence collected by the FDIC, these companies and certain associated parties made false representations by: (1) stating or suggesting they are FDIC-insured or that certain uninsured financial products are insured by the FDIC; (2) misusing the FDIC name or logo; (3) misrepresenting the nature or extent of deposit insurance; and/or (4) failing to clearly identify the insured depository institutions with which they have a relationship for the placement of customer deposits and into which funds may be deposited.

The Office of the Comptroller of the Currency (OCC) reported on the performance of first-lien mortgages in the federal banking system during the fourth quarter of 2023. The OCC Mortgage Metrics Report, Fourth Quarter 2023 showed that 97.2 percent of mortgages included in the report were current and performing at the end of the quarter, an increase from the 97.1 percent in fourth quarter 2022, and a decrease from the previous quarter’s 97.3 percent.

The Securities and Exchange Commission (SEC) announced that Genesis Global Capital, LLC agreed to a final judgment ordering it to pay a $21 million civil penalty and imposing a permanent injunction to settle charges that it engaged in the unregistered offer and sale of securities through a crypto asset lending program known as the Gemini Earn program. Under the terms of the settlement, the SEC will not receive any portion of the penalty until after payment of all other allowed claims by the bankruptcy court, including claims by retail investors in the Gemini Earn program.

The SEC announced settled charges against two investment advisers, Delphia (USA) Inc. and Global Predictions Inc., for making false and misleading statements about their purported use of artificial intelligence (AI). The firms agreed to settle the SEC’s charges and pay $400,000 in total civil penalties.

SEC Chair Gary Gensler delivered remarks on AI washing, when a person misleads the public by saying they are using an AI model when they are not. Chair Gensler stated that investment advisors and broker dealers should ‘say what they’re doing, and do what they’re saying” when it comes to AI.”

The Financial Industry Regulatory Authority (FINRA) Board of Governors met on March 6-7 for the first time in 2024. The Board received a briefing on examinations and investigations and continued discussions around FINRA’s long-term financial planning. The Board also approved a rule proposal on modifications to proposed amendments to the Codes of Arbitration Procedure previously approved by the Board to accelerate case processing for elderly or seriously ill parties, which would lower the age at which parties would qualify for accelerated processing. The proposal will require SEC approval before going into effect.

FINRA announced that it has fined M1 Finance LLC $850,000 for social media posts made by influencers on the firm’s behalf that were not fair or balanced, or contained exaggerated, unwarranted, promissory or misleading claims. This case arises from FINRA’s targeted exam of firm practices related to the acquisition of customers through social media channels and represents the first formal FINRA Enforcement disciplinary action involving a firm’s supervision of social media influencers.

The National Credit Union Administration (NCUA) released the latest  Quarterly U.S. Map Review. The report found that federally insured credit unions experienced growth in loans and the share of credit unions with positive net income increased over the year ending in the fourth quarter of 2023, while delinquencies rose and assets and shares and deposits declined.

Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra delivered remarks at the Financial Data Exchange Global Summit. Director Chopra spoke on the status of America’s shift to open banking, with a focus on the role of standard setters and standard-setting. Director Chopra also discussed the dangers of how the standard-setting process can be weaponized in an anticompetitive way, and how standard-setting organizations can anticipate becoming recognized by the CFPB. 

Need to catch up on what happened last week? Check out our March 15th End of Week Wrap Up here