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  • CFPB Launches Consumer Complaint Database

    FinTech

    On June 19, the CFPB released a beta version of its consumer complaint database. The database includes credit card complaints received on or after June 1, 2012. The CFPB plans to add credit card complaint data received prior to June 1, 2012 by the end of 2012. The database provides summary information related to (i) the issue identified in each complaint, (ii) the date of the complaint, (iii) the company named in the complaint, and (iv) the status and timeliness of the resolution. The credit card complaint database is governed by a CFPB Final Policy Statement, which addresses comments received in response to a 2011 version of the statement. Concurrent with the database launch, the CFPB released for public comment a Notice of Proposed Policy Statement that would extend the scope of the database to include all other financial services and products within the CFPB’s jurisdiction. The CFPB is accepting comments on the proposed expanded policy through July 19, 2012.

    Credit Cards CFPB

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  • Fannie Mae Announces Private Transfer Fee Covenant Policy, Revises Loan Modification Agreement

    Lending

    Telia Company, a Swedish telecommunications company, disclosed in its Third Quarter Interim Report that it has set aside $1.45 billion to settle investigations conducted by Dutch and U.S. authorities regarding alleged bribery in Uzbekistan. Telia disclosed that the authorities have proposed a global resolution that includes a financial sanction of $1.45 billion, although the company noted that further discussion and negotiation is necessary; the timing and amount of payment is uncertain at this time.

    Fannie Mae Mortgage Origination Mortgage Servicing RMBS

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  • OCC Adopts Interim Final Lending Limit Rule

    Consumer Finance

    Embraer S.A., a Brazilian aircraft manufacturer, will pay more than $205 million to the SEC and the DOJ to resolve alleged FCPA violations stemming from payments made through its third-party agents to officials in the Dominican Republic, Saudi Arabia, and Mozambique that allegedly resulted in more than $83 million in profits for the company. Pursuant to a Deferred Prosecution Agreement with DOJ, Embraer must pay a penalty of more than $107 million and must retain an independent corporate compliance monitor for three years. Embraer will also pay more than $98 million in disgorgement and interest to the SEC, but it may receive a credit of up to a $20 million depending on the amount of disgorgement it pays in a parallel civil proceeding in Brazil. Additional FCPA Scorecard coverage of the Embraer investigation can be found here, here, and here.

    OCC Bank Compliance

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  • CFPB Announces Senior Staff Changes

    Consumer Finance

    On June 19, the CFPB announced a series of senior leadership changes and additions. Meredith Fuchs will now serve as General Counsel. She replaces Leonard Kennedy, who will now serve as Senior Advisor and Counselor to Director Richard Cordray. Ms. Fuchs had been serving as CFPB Chief of Staff and, prior to that, served as Principal Deputy General Counsel. Garry Reeder, who had been Senior Advisor to the Deputy Director, will now serve as Acting Chief of Staff. Steven Antonakes has been promoted to Associate Director for Supervision, Enforcement, and Fair Lending. The Assistant Director of Large Bank Supervision position that he leaves behind will be filled on an “acting” basis by Paul Sanford, who has been serving as Chief of Staff for Large Bank Supervision. In addition, Wendy Kamenshine has transitioned from Acting Ombudsman to Ombudsman, Clifford Rosenthal joined the CFPB as Assistant Director of Financial Empowerment, and Camille Busette was hired as Assistant Director of the Office of Financial Education.

    CFPB

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  • FDIC Supplements Proposed Orderly Liquidation Authority Rule

    Consumer Finance

    On June 18, the FDIC published a Supplemental Notice of Proposed Rulemaking to amend the definition of “financial activities” included in a March 2011 Notice of Proposed Rulemaking regarding the Orderly Liquidation Authority (OLA). The March 2011 proposal sought to establish a comprehensive framework for the priority payment of creditors and procedures for filing and pursuing claims under the OLA created by the Dodd-Frank Act. Among other things, the proposal defined “financial companies” that may be subject to resolution under the OLA as those that are "predominantly engaged" in financial activities. To be "predominately engaged" in financial activities, the company must have derived at least 85 percent of its total consolidated revenue from financial activities over the two most recent fiscal years. In this supplemental notice, the FDIC delineates the categories of “financial activities” for purposes of the March 2011 proposal.

    FDIC Dodd-Frank

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  • CFPB Seeks Information on Compliance Costs

    Consumer Finance

    On June 14, the CFPB published a Notice and Request for Comment on its proposal to collect qualitative information from industry participants regarding the compliance costs and other effects of CFPB rules on providers and consumers. The CFPB plans to use structured interviews, focus groups, conference calls, and written questionnaires to obtain supplemental information about industry compliance burdens. The CFPB frames the proposal as part of its ongoing effort to streamline inherited regulations, and has asked that comments on the proposed information collection be submitted by August 13, 2012.

    CFPB Bank Compliance

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  • NTIA Announces First Privacy Stakeholder Meeting

    FinTech

    On June 15, the National Telecommunications and Information Administration (NTIA) announced that the first meeting of a privacy multistakeholder process will be held on July 12, 2012. The meeting is the first in a series intended to produce a code of conduct that will provide transparency in the handling of personal data by mobile application and services companies. The multistakeholder process derives from the White House’s Privacy Blueprint released in February 2012, which set forth a Consumer Privacy Bill of Rights and designed the multistakeholder process to develop legally enforceable codes of conduct across diverse business contexts.

    Mobile Commerce Privacy/Cyber Risk & Data Security

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  • HUD Rescinds Disputed Accounts and Collection Accounts Guidance

    Lending

    On September 29, 2016, the DOJ issued two declination letters concerning suspected FCPA violations, closing their investigations of HMT LLC and NCH Corporation.  The DOJ claims that its investigation of HMT found that the company’s employees paid approximately $500,000 in bribes to Venezuela and China government officials in order to influence those officials’ purchasing decisions and thereby secure approximately $2.7 million in profits. With respect to its investigation of NCH, DOJ claims that the company’s China subsidiary provided approximately $45,000 worth of benefits to China government officials to obtain sales which generated profits of approximately $335,000.  In connection with the issuance of the declination letters, the companies agreed to the disgorgement of their profits from the sales associated with their purportedly illegal conduct.

    The declinations were made pursuant to the FCPA Pilot Program, a one-year program launched in April 2016 to encourage companies to voluntarily self-disclose FCPA-related misconduct, cooperate with DOJ, and make appropriate remediation efforts.  The DOJ’s decision to close the investigations was based on a number of factors including the companies’ (1) voluntary disclosures, (2) thorough internal investigations, (3) full cooperation in providing DOJ with information about the individuals responsible for the purported misconduct, (4) agreement to disgorge all profits made from the purported misconduct, (5) enhancement of compliance programs and internal accounting controls, and (6) remediation in the form of terminating or sanctioning employees responsible for the purported misconduct.  These are the fourth and fifth declination letters issued under the Pilot Program.

    The disgorgement of profits in connection with the declination letters to HMT and NCH raises the question of whether such disgorgement may be a prerequisite to obtaining a declination letter under the Pilot Program. Companies that previously received declination letters under the Pilot Program were required to disgorge profits as part of settling related SEC enforcement actions. Past FCPA Scorecard coverage of the Pilot Program and associated declination letters may be found here.

    HUD

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  • NIST Publishes Cloud Computing Guidance

    FinTech

    On September 21, 2016, the SEC reached a $766,000 settlement with Nu Skin Enterprises, Inc. over charges that it violated the internal controls and books and records provisions of the FCPA. The SEC alleged that Nu Skin’s China subsidiary made a $150,000 payment to a charity chosen by a Chinese Communist party official in order to obtain that official’s assistance in terminating an on-going provisional agency investigation into Nu Skin’s compliance with local rules for direct selling.

    The settlement reveals important lessons for U.S. companies regarding oversight of charitable contributions made by their foreign-based subsidiaries.  According to the Order, Nu Skin’s China subsidiary had informed its U.S. counterpart of the donation but omitted the relationship between the donation, foreign official, and provisional agency investigation. While the U.S. company flagged the FCPA risks a large donation in China may raise, and advised its China subsidiary to consult with outside U.S. legal counsel to assure compliance, the counsel’s advice was ultimately ignored by the subsidiary.  The SEC concluded that Nu Skin failed to maintain necessary internal controls, specifically with respect to due diligence conducted by its China subsidiary regarding charitable contributions and accounting for such donations.

    Notably, this is the second time that the government has charged a company with violating the FCPA based only on a charitable donation to purportedly buy the influence of a foreign official.  The settlement illustrates the SEC’s increasing focus on charitable donations in high risk markets.

    NIST Privacy/Cyber Risk & Data Security

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  • Federal District Court Allows Interlocutory Appeal of Challenge to FHFA MBS Suit

    Securities

    On September 30, 2016, the SEC reached a $20 million settlement with GlaxoSmithKline arising from the company’s business in China.  The SEC alleged that between 2010 and 2013, sales and marketing managers of GlaxoSmithKline’s China subsidiary made corrupt payments to medical professionals to encourage more prescriptions for the company’s products.  The purported corrupt payments included gifts, travel, entertainment, shopping, and cash but were recorded in GlaxoSmithKline’s books and records as legitimate marketing expenses, speaker fees, medical association payments, and travel and entertainment expenses.  Because the medical professionals worked in government-owned hospitals, the SEC considered them to be foreign government officials under the FCPA, and charged the company with violations of the internal controls and recordkeeping provisions of the FCPA.

    The $20 million dollar settlement with the SEC follows an almost $490 million sanction ordered in 2014 by a Chinese Court against GlaxoSmithKline’s Chinese subsidiary based on the same alleged bribery scheme.  Five of GlaxoSmithKline’s managers were also convicted in that action in China and its former country manager was deported.  FCPA Scorecard coverage of the Chinese Court order can be found here.

    Freddie Mac Fannie Mae RMBS FHFA

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