Financial Regulatory Forum

U.S. consumer bureau’s first criminal referral is a warning for regulated banks

By Emmauel Olaoye, Compliance Complete

WASHINGTON, May 15 (Thomson Reuters Accelus) - Lenders who work closely with unregulated financial companies should conduct a thorough background check on the track record of such companies if they want to avoid being sanctioned by regulators.

The advice comes a few days after federal prosecutors charged debt settlement company Mission Settlement Agency and four individuals with mail and wire fraud. The charges were the result of allegations that the defendants ran a scheme that victimized more than 1,200 people across the United States. (more…)

CFTC adopts final rule requiring firms to save their oral communications

By Emmanuel Olaoye, Compliance Complete

WASHINGTON/NEW YORK, Dec. 19 (Thomson Reuters Accelus) – The Commodity Futures Trading Commission on Monday approved a final rule that would require firms registered with the agency to record the oral communications of their brokers for up to a year.

Firms would have to start recording conversations on telephones, voicemail, cell-phones and other media if they trade in a “commodity interest”.  (more…)

IA brief: California broadens scope of private-adviser exemption

By Jason Wallace

NEW YORK, Sept. 12 (Thomson Reuters Accelus) - California has broadened registration exemptions for private-fund advisers in a final rule adopted by the state Department of Corporations that considers the manager and its fund-investor characteristics rather than “assets under management” (AUM) or the number of clients.

The move aims to minimize regulatory requirements on a venture-capital industry considered to be a lifeblood for the emerging firms that fuel California’s high-tech economy, and responds to changes in registration requirements under national Dodd-Frank Wall Street reforms. (more…)

Weak U.S. legal oversight puts burden on compliance pros to protect their firms, author says

By Stuart Gittleman

NEW YORK, Sept. 4 (Thomson Reuters Accelus) - An inadequate government and industry response to the financial crisis will require compliance professionals to do more to protect their firms, customers and colleagues, Jeff Connaughton, who said he saw firsthand how reform withered in Congress, has told Compliance Complete.

“Until law enforcement causes actual deterrence, compliance needs to understand what institutional and retail customers can – and can’t – stomach. And those customers need to get back to performing exacting due diligence. Until we have tough law enforcement again, institutional customers will have a greater impact on Wall Street behavior than federal prosecutors,” said Connaughton, a former investment banker, aide in President Bill Clinton’s administration, lobbyist and longtime political associate of Vice President Joe Biden. (more…)

With new U.S. swaps definitions, the horse is finally put before the cart

By Bora Yagiz

NEW YORK, July 24 (Thomson Reuters Accelus) - The definition of swaps finalized by the U.S. futures regulator is the linchpin in an overhaul that will change the swaps market landscape markedly and offer the promise of lower risk.

In an effort to bring the over-the-counter (OTC) swaps into the regulatory fold for the first time since they appeared in 1981, the Commodity Futures Trading Commission (CFTC) issued a set of final rules this month defining a “swap” under the Dodd-Frank Act, section 721. These rules complement the agency’s other final rule on end-user exemptions as well as those adopted by the Securities and Exchange Commission on “security-based swaps” and “security-based swaps agreements.” They also delineate the jurisdiction for mixed swaps between the agencies. (more…)

First wave of U.S. living wills has limitations, but offers useful start

By Bora Yagiz

NEW YORK, July 9 (Thomson Reuters Accelus) - The “living will” resolution plans submitted to U.S. regulators by nine big banks last week suffer from a number of limitations, including narrow scenarios of financial distress and an assumption that regulators will be coordinated in their approach. But there will be plenty of opportunity to perfect the blueprints.

Five major U.S. banking organizations and four foreign-based bank holding companies with $250 billion or more in total nonbank assets submitted on July 2 their resolution plans, or “living wills,” to the Federal Reserve Board and Federal Deposit Insurance Corporation (FDIC) as required by section 165(d) of the Dodd-Frank Act (DFA). This constituted the first of the three waves of submissions of a staggered schedule arranged according to the banks’ sizes and due to be completed by end-2013. These plans to complement the recovery plans that are designed to maintain firms under extreme stress as going concerns, will serve as the official point of entry for bankruptcy. (more…)

First wave of U.S. “living wills” provides a blueprint for the industry

By Bora Yagiz

NEW YORK, July 2 (Thomson Reuters Accelus) - The biggest U.S. banks and foreign banks with U.S. operations will show regulators and the world this week how they are not “too big to fail.”

On Monday U.S. bank holding companies with $250 billion or more in total nonbank assets and foreign-based bank holding companies with $250 billion or more in total U.S. nonbank assets are due to submit resolution plans, known as the “living wills” to the Federal Reserve and Federal Deposit Insurance Corp.  (more…)

Suit against U.S. Consumer Financial Protection Bureau could force it to define limits to its authority, says banking industry lawyer

By Emmanuel Olaoye

NEW YORK, June 29 (Thomson Reuters Accelus) - Even if a small bank’s lawsuit challenging the authority and leadership of U.S. Consumer Financial Protection Bureau fails in court, it could force the bureau to publicly define its limits, a top banking industry lawyer said.

Joseph Barloon, a partner at Skadden Arps in Washington, said the bureau could be forced to say what it can and cannot do, and provide the banking industry some guidance on the agency’s positions on issues such as mortgage lending. (more…)

U.S. state oversight of small investment advisers takes effect; exams and enforcement loom

By Jason Wallace

SAN DIEGO/NEW YORK, June 28 (Thomson Reuters Accelus) – A long anticipated and well-publicized deadline for “the switch” is here. According to recent estimates, 2,500 investment advisers with less than $100 million of regulatory assets under management will make the switch from the U.S. Securities and Exchange Commission oversight to registration and in one or more states, with the prospect of more frequent exams and vigorous enforcement.
Today’s deadline requires the firm to be registered in the applicable states and withdraw its SEC registration by the end of the day. Although the proverbial switch has been pulled, the regulatory changes have just begun. Newly transitioned mid-sized advisers will now face an imminent regulatory exam and be required to comply with unique state compliance requirements. (more…)

Big banks can be shrunk — here’s how

By Stuart Gittleman

NEW YORK, June 12 (Thomson Reuters Accelus) – A need to break up big banks is one of the several lessons policy makers should have learned from the financial crisis that have either been ignored or forgotten, according to Phil Angelides, who chaired the congressionally appointed Financial Crisis Inquiry Commission.

If the largest banks can only be run so recklessly that they harm the economy as well as themselves, they should be broken up, Angelides said in a talk at the Center for National Policy, an independent Washington D.C. think tank. (more…)

  •