Compliance Alert - March 2015

Consumer Financial Protection Bureau (CFPB)

The CFPB sued a mortgage broker and lender for deceptive advertising.

At the beginning of February, the CFPB took action against a mortgage broker and lender based in Maryland for false reverse mortgage advertisements, citing the 2011 Mortgage Acts and Practices Advertising Rule. The Bureau alleges that mailings by the broker/lender imitated U.S. government notices and misrepresented that the FHA-insured reverse mortgage program was “time-limited or had a deadline.” The CFPB argues that claims made by the broker/lender were inaccurate and blatantly misleading. 
More information on the complaint can be found here.

The CFPB announced a proposal to help facilitate access to credit in rural areas.

Opening for comment last month, the CFPB announced a proposal for more changes to mortgage rules in order to better serve rural and underserved areas. The proposal, according to the CFPB’s press release, would extend provisions to cover more community banks, credit unions, and other creditors. The proposed amendments would expand the definitions of “small creditor” and “rural,” among other changes. Comments close on March 30, 2015.
The full list of proposed amendments can be found here.

The CFPB ordered a subprime credit card company to refund millions for charging illegal credit card fees to consumers.

At the beginning of February, the CFPB ordered a subprime credit card company based in Delaware to refund approximately $2.7 million to 98,000 consumers who were charged illegal credit card feeds. The CFPB alleges that the company misrepresented certain fees, leading to the illegal charges. The company was also required to pay a civil penalty of $250,000.  
More information on the order can be found here.

Office of the Comptroller of the Currency (OCC)

The OCC participated in a consumer protection event on Capitol Hill to promote consumer awareness and engagement.

During the February 20th National Consumer Protection Week (NCPW) event in Washington D.C., OCC representatives distributed HelpWithMyBank booklets, Consumer Advisories, and other materials, in English and Spanish, to help promote awareness of consumer protection resources. NCPW is held every year to encourage consumers nationwide to take full advantage of their consumer rights.
The materials can be found on the NCPW Web site.

The OCC released a list of enforcement actions and terminations taken against national banks, federal savings associations, and more for February.

On February 20, the OCC released new enforcement actions taken against different institutions. The list includes all Cease and Desist Orders, Civil Money Penalty Orders, and Removal/Prohibition Orders. This list can be found here.

The federal bank regulatory agencies requested comment on inter-agency efforts to reduce the regulatory burden.

The OCC, along with the Federal Reserve and the FDIC, requested comment on a set of regulatory categories as part of their review to identify outdated or unnecessary financial regulations. This is part of a requirement by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), which requires institutions including the FFIEC, OCC, FDIC, and Federal Reserve to review their regulations at least every 10 years. 

Comments on regulations in banking operations, capital, and Community Reinvestment Act categories are being accepted until May 14, 2015. More information can be found here.

Securities and Exchange Commission (SEC)

The SEC has submitted for comment a proposed rule concerning amendments to Regulation SBSR - Reporting and Dissemination of Security-Based Swap Information.

Regulation SBSR (Reporting and Dissemination of Security-Based Swap Information) contains several rules relating to regulatory reporting and public dissemination of security-based swap transactions. The rule was re-proposed in 2013 as part of the Cross-Border Proposing Release, which proposed rules and interpretations regarding the application of Title VII of the Dodd-Frank Act to cross-border security-based swap activities, according to the proposal published by the SEC.
The SEC is now proposing new amendments, including:

• Requiring a platform to report to a registered swap data repository (SDR) a security-based swap executed on such platform that will be submitted to clearing.
• Requiring a registered clearing agency to report to a registered SDR any security-based swap to which it is a counterparty
• Prohibiting registered SDRs from charging fees for or imposing usage restrictions on the users of the security-based swap transaction data that they are required to publicly disseminate

The full proposal can be found here.

The SEC won a summary judgment against an individual for his role in a wide-ranging fraud scheme violating several sections of the Securities Act of 1933 and the Securities Exchange Act of 1934.

In December 2014, a man was sentenced to 17 years imprisonment for his role in a wide-ranging fraud scheme. Based on that conviction, summary judgment was awarded in the SEC’s favor on the Commission’s claims that sections of the Securities Act of 1933 and the Securities Exchange Act of 1934 were violated. The U.S. District Court for the Central District of California imposed “permanent injunctions, officer and director bars, a penny stock bar, a civil penalty of $5,378,581.61, and disgorgement and prejudgment interest of $6,076,415.52” against the individual in question.
More information on the civil action can be found here.

The SEC charged a former Fortune 500 company executive with insider trading charges.

On February 19, the SEC announced insider trading charges against a former Fortune 500 company executive and his brother-in-law. Those allegedly tipped by the former executive made nearly $1 million in combined illicit profits. The U.S. Attorney’s Office for the Middle District of Louisiana also announced criminal charges against the former executive, while his alleged cohorts agreed to pay disgorgement and penalty charges.
More information on the action can be found here.

Federal Deposit Insurance Corporation (FDIC)

The FDIC has added educational material on mortgage rule requirements.

The Federal Deposit Insurance Corporation (FDIC) has released three technical assistance videos as part of its Technical Assistance Video Program to help financial institution employees and directors alike to meet regulatory requirements, particularly in light of the Consumer Financial Protection Bureau’s (CFPB’s) new mortgage servicing requirements. The videos cover the Ability to Repay/Qualified Mortgages, Loan Originator Compensation Rule, and, most recently, Small Servicers.

The FDIC reported insured institutions earned $36.9 billion in the fourth quarter of 2014.

On February 24th, a press release was issued that stated that FDIC-insured commercial banks and savings institutions “reported aggregate net income of $36.9 billion in the fourth quarter of 2014, down $2.9 billion (7.3 percent) from earnings of $39.8 billion that the industry reported a year earlier.” The decline in earnings was attributed to the increase in litigation expenses for a few large banks. The full report can be found on the FDIC’s website, including the increase in community bank earnings. Learn more here.

The FDIC issued a list of state nonmember banks evaluated for CRA compliance.

At the beginning of February, the FDIC issued its list of state nonmember banks that have been evaluated for Community Reinvestment Act (CRA) compliance. Copies of each individual bank’s CRA evaluation are available directly from the banks, which they are required to make available upon request. More information can be found on the FDIC’s website.

National Credit Union Administration (NCUA)

The NCUA Report announced the 2015 NCUA webinar schedule.

The February NCUA Report announced the NCUA’s 2015 webinar schedule. There will be one webinar a month for the rest of the year, and two in April, covering topics such as opportunities in the underserved market, membership expansion, new products and services, auto lending, mortgage lending, and more. More information can be found on the NCUA’s website.

The NCUA launched its Small Business Lending Resource Center for credit unions.

On February 20th, the NCUA released a webpage containing information about member business lending. According to the press release from the NCUA, “the Small Business Lending Resource page provides detailed information about NCUA’s member business lending rules and regulations, supervisory guidance, links to the Small Business Administration’s loan programs and related articles from The NCUA Report, NCUA’s flagship publication.”
The resource can be found here.

For American and Military Saves Week, the NCUA released information and savings tips on its website.

During America Saves and Military Saves Week, from February 23rd to the 28th, consumers can visit the NCUA’s MyCreditUnion.gov website for savings tips and tricks. The online resource  has information for credit unions and members alike, including how to join or start a credit union, tips for preventing identity theft, and other financial tools and resources.
More information can be found here.

Federal Reserve Bank

The results of the Federal Reserve's floating-rate offering of term deposits are in.

According to the FDIC press release, the Federal Reserve conducted a “floating-rate offering of term deposits through its Term Deposit Facility.” The results were announced on February 19th; awarded deposits settled on the same day, and maturation is expected on March 12th.
More information can be found here.

The Federal Reserve and the FDIC announced the extension of a resolution plan submission deadline for three financial institutions.

On February 18th, the Federal Reserve along with the FDIC announced that they were extending the resolution plan submission deadline for three organizations. The financial institutions are now required to submit their second annual plans by December 31st, 2015 rather than July 1st. The extension is consistent with other extensions granted to similar firms in previous years.
More information can be found here.

Several federal bank regulatory agencies, including the Federal Reserve, requested comment on a set of regulatory categories.

The Federal Reserve, the FDIC, and the OCC issued a request for comments on February 20th concerning a second set of regulatory categories as part of their review to identify “outdated or unnecessary regulations applied to insured deposit institutions.” The review is mandated by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). Comments are being accepted until May 14, 2015.
For more information, see the press release here.

Other Regulatory Bodies

The FTC issued its annual ECOA report to the CFPB.

On February 18, the Federal Trade Commission (FTC) provided its annual report on enforcement of the Equal Credit Opportunity Act (ECOA) to the CFPB. The letter outlines the progress the FTC has made on ECOA policy issues, as well as business and consumer educational efforts the Commission has made. The announcement and more details can be found here.

The FFIEC issued a revised Business Continuity Planning Booklet.

The Federal Financial Institutions Examinations Council (FFIEC) issued a revised Business Continuity Planning Booklet (BCP Booklet) at the beginning of February. The update consists of the addition of a new appendix, entitled Strengthening the Resilience of Outsourced Technology Services. The appendix addresses the relationship with third-party service providers and the financial institution.
More information on the update can be found here.

HUD issued guidance on home lending and placement for transgender persons in homeless shelters.

On February 23rd, the U.S. Department of Housing and Urban Development (HUD) issued guidance on home lending and placement that better serves LGBT Americans. The guidance helps to clarify the Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity Rule, better known as the Equal Access Rule, which was published in 2012.
The full press release can be found here.

Compliance Alert - April 2015

Consumer Financial Protection Bureau (CFPB)

TILA-RESPA Integrated Disclosure Rule implementation materials updated.

The CFPB announced an update to its TILA-RESPA regulatory implementation materials available on its site. The update incorporates finalized changes to the guide to forms, disclosure timeline, and samples. The CFPB also updated its Small Entity Compliance Guide for the Loan Originator Rule.

More information can be found on here.

Policy for public consumer complaints finalized.

The CFPB announced that it finalized its policy empowering consumers to voice publicly their complaints about consumer financial products and services. When consumers submit a complaint to the CFPB, they now have the option to share their account of what happened in the CFPB’s public-facing Consumer Complaint Database.

More information can be found here.

Rule proposal concerning Regulation E and Regulation Z.

In December of 2014, the CFPB issued a Notice of Proposed Rulemaking (NPR) concerning amendments to Regulation E, which implements the Electronic Fund Transfer Act (EFTA), and Regulation Z, which implements the Truth in Lending Act (TILA). The proposed rule would create comprehensive consumer protections for prepaid financial products, as well as expressly bring such products within the domain of Reg E as prepaid accounts and create new provisions specific to such accounts. Comments for this proposal closed on March 23, 2015.

Information about the rule can be found here.

Office of the Comptroller of the Currency (OCC)

$500,000 civil money penalty assessed against Pennsylvania bank.

In late February, the OCC assessed a $500,000 civil money penalty against a Pennsylvania bank for Bank Secrecy Act (BSA) violations. The OCC found that the bank had failed to file suspicious activity reports (SARs) on a timely basis in connection with certain suspicious transactions. The transactions that were reported in the suspicious activity reports took place between 2005 and 2009.

More information can be found here.

Enforcement actions and terminations for March.

The OCC released the latest enforcement actions taken against national banks, federal savings associations, and individuals currently and formerly affiliated with national banks and federal savings associations.

The full list can be viewed here.

Statement regarding $3.6 trillion municipal securities market.

In March the OCC issued a statement regarding investments in municipal securities made by national banks and federal savings associations. The purpose of the statement was to confirm that the OCC recognizes the importance of the $3.6 trillion municipal securities market as a source of infrastructure funding for states, cities, and localities in the U.S.

The full statement can be viewed here.

Securities and Exchange Commission (SEC)

Trading in 128 inactive penny stock companies suspended.

At the beginning of March, the SEC announced that it had suspended trading in 128 inactive penny stock companies in order to ensure that they did not become a source for pump-and-dump schemes. These suspensions are the latest in a microcap fraud-fighting initiative known as Operation Shell-Expel in which the SEC Enforcement Division’s Office of Market Intelligence utilizes technology to scour the over-the-counter (OTC) marketplace and identify dormant companies ripe for abuse.

The full announcement can be viewed here.

Over $475,000 awarded to whistleblower.

The SEC announced a whistleblower award payout between $475,000 and $575,000 to a former company officer who reported original, high-quality information about a securities fraud that resulted in an SEC enforcement action with sanctions exceeding $1 million at the beginning of March.

The SEC has now awarded 15 whistleblowers since its whistleblower program began more than three years ago.  Payouts have totaled nearly $50 million out of an investor protection fund established by Congress. More information about this program can be viewed here.

$225,000 penalty assessed for customer protection violations.

The SEC assessed a $225,000 penalty against an Irving, Texas-based brokerage firm with violating key customer protection rules after failing to adequately supervise registered representatives who misappropriated customer funds. The company agreed to settle the charges and acquire an independent compliance consultant to improve supervisory controls.

More information on the case can be found here.

Federal Deposit Insurance Corporation (FDIC)

Banks examined for CRA compliance.

At the beginning of March the FDIC issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in December 2014. Banks are assessed according to the following ratings: O for Outstanding; S for Satisfactory; NI for Needs to Improve; and SN for Substantial Non-compliance.

The March list can be found here.

$6.6 million in losses reported from 2012 closure.

According to several sources, the FDIC reported that the 2012 failure of one financial institution resulted in over $6 million in losses for the regulator. In March, the FDIC sued 14 decision-makers at the previously $71 million-asset bank to attempt the recovery of funds lost. The FDIC had initially estimated a $17 million loss from the bank’s failure. 

$2.6 million settlement over failed lender collapse.

In late March, the FDIC finalized a $2.6 million settlement with board members of a failed Charleston-based lender, which will be covered by an insurance policy. The FDIC had predicted a $43 million loss after the lender’s 2011 collapse. The FDIC had initially filed a Directors and Officers Liability (D&O) lawsuit against the directors and officers of the lender for negligence concerning 22 loans totaling nearly $19 million.

National Credit Union Administration (NCUA)

Suit filed against state and federal law violator.

In March the NCUA announced a lawsuit in federal court against a bank, alleging that the institution violated state and federal law by failing to fulfill its duties as trustee for 37 residential mortgage-backed securities trusts. The bank, as trustee, had contractual, statutory, and common law duties to protect the interests of certificate holders, and each trust consisted of hundreds of residential mortgage loans that were pooled together and securitized for sale to investors. The bank’s failure to live up to its obligations resulted in almost $2 billion lost in residential mortgage-backed securities.

More information about the suit can be found here.

Proposed rule to eliminate fixed-assets cap.

The NCUA approved the proposal of a rule to provide regulatory relief to thousands of federal credit unions by eliminating certain provisions in the agency’s fixed-assets rule, including the current 5% cap on investments in fixed assets. This is the latest step in NCUA’s Regulatory Modernization Initiative; the proposed rule would eliminate the current 5% aggregate limit on investments in fixed assets for federal credit unions with assets of at least $1 million and provide other relief.

More information on the proposal can be found here.

New video series on CDFI certification. 

The NCUA announced a new five-part video series, “CDFI Fun Certification,” on its YouTube channel that will help credit unions interested in becoming certified as Community Development Financial Institutions. The videos will discuss the seven criteria that must be met, including the purpose and process of CDFI certification.

The YouTube channel can be accessed here.

Federal Reserve Bank

Supervisory bank stress test results released. 

At the beginning of March, the Federal Reserve released the results of supervisory stress tests, indicating that the largest U.S.-based bank holding companies continue to build their capital levels and to strengthen their ability to lend to households and businesses during a period marked by severe recession and financial market volatility. According to the FDIC press release, the most severe hypothetical scenario projects that loan losses at the 31 participating bank holding companies would total $340 billion during the nine quarters tested.

The Dodd-Frank Act 2015 supervisory stress test methodology and results paper can be found here.

Comprehensive Capital Analysis and Review (CCAR) results released. 

According to a March 11^th press release, the Federal Reserve on Wednesday announced it has not objected to the capital plans of 28 bank holding companies participating in the Comprehensive Capital Analysis and Review (CCAR). The CCAR evaluates the capital planning processes and capital adequacy of the largest U.S.-based bank holding companies, including the firms' planned capital actions such as dividend payments and share buybacks and issuances.

More information on the CCAR results can be found here.

Requirement proposed concerning Legal Entity Identifiers (LEIs). 

The Federal Reserve Board announced a proposal to require banking organizations to include their existing Legal Entity Identifiers (LEIs) on certain regulatory reporting forms. The LEI is a unique reference code to enable easier identification of a firm's legal entities. The proposal, if approved, would require LEIs on certain reporting forms from June 30, 2015 onward.

The Federal Reserve announcement can be found here.

Other Regulatory Bodies

$10 million civil money penalty assessed against casino for BSA/AML violations. 

An Atlantic City casino with a “long history of prior, repeated BSA violations” was fined a $10 million civil money penalty by the Financial Crimes Enforcement Network (FinCEN) last month for willful and repeated violations of the Bank Secrecy Act (BSA) and anti-money laundering (AML) program requirements, reporting obligations, and recordkeeping requirements. FinCEN is also requiring that the casino conduct periodic external audits and report to FinCEN and the casino’s Board. 

Rules of Practice revisions. 

The Federal Trade Commission (FTC) has announced that it is revising certain rules of practice to promote fairness, flexibility and efficiency in its investigations, studies, and adjudicative proceedings. These rule revisions include a revision to the rule governing the status of cases in administrative adjudication following a district court's denial of preliminary injunctive relief in an ancillary proceeding, among other changes.

For more information, visit the Federal Register here.

Final rule concerning bank capital stock and capital plans adopted. 

The Federal Housing Finance Agency (FHFA) is adopting a final rule transferring existing parts of the Federal Housing Finance Board regulations to the FHFA regulations. These rules address capital stock and plans; changes were not substantive but proposed to delete certain provisions applying to the one-time conversion of bank stock.

More information can be found here.

Compliance Alert - May 2015

Federal Deposit Insurance Corporation (FDIC)

Banks examined for CRA compliance.

At the beginning of April, the FDIC issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in January 2015.

The list can be found here.

EGRPRA outreach meetings announced.

The Board of Governors of the Federal Reserve System, the FDIC, and the OCC, collectively known as the federal banking agencies, announced that they will hold an outreach meeting on Monday, May 4, as part of their regulatory review under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). The meeting is the third in a series. The scope of the EGRPRA has also been expanded to cover more recent regulations.

More information can be found here.

Input sought on new recordkeeping standards.

The FDIC announced that it was seeking input on potential new recordkeeping standards for a limited number of FDIC-insured institutions with a large number of deposit accounts. Comments are being accepted for 90 days after the publication of the advanced notice of proposed rulemaking. 

More information on the standards can be found here.

March enforcement actions made public.

The FDIC published a list of administrative enforcement actions taken against banks and individuals in March. There were a total of 27 orders and two notices, including consent orders, cease and desist orders, removal and prohibitions orders, and one civil money penalty of $10,600.

The orders can be viewed here.

Office of the Comptroller of the Currency (OCC)

Temporary extension given for certain protections under SCRA.

The OCC issued a bulletin information national banks, federal savings associations, and federal branches and agencies of foreign banks (OCC-supervised institutions) of the temporary extension of certain protections under the Servicemembers Civil Relief Act (SCRA), enacted by the Foreclosure Relief and Extension for Servicemembers Act of 2014. The extention expires on December 31, 2015. 

More information can be found here.

Counterfeit cashier’s checks alert issued in connection with digital shopper scam.

The OCC issued an alert concerning a New York bank which reported that counterfeit cashier’s checks using a correct routing number of 021406667 were being presented for payment nationwide in connection with a digital shopper scam. The checks were made payable in the amounts of $2,360 and $2,780.

More information can be found here.

RESPA handbook revised.

The OCC issued a bulletin announcing the revision of the Real Estate Settlement Procedures Act (RESPA) booklet of the Comptroller’s Handbook. The revised booklet replaces a similarly-titled booklet issued in October 2011 and provides updated information resulting from recent changes made to Regulation X regarding mortgage servicing and loss mitigation.

The full statement can be viewed here.

Securities and Exchange Commission (SEC)

$12 million penalty charged for breach of fiduciary duty.

The SEC charged a limited liability corporation with reaching its fiduciary duty by failing to disclose a conflict of interest created by the outside business activity of a top-performing portfolio manager. The company agreed to pay the $12 million penalty and undergo an independent compliance review.

The full announcement can be viewed here.

10 charged with fraud in penny stock scheme.

The SEC announced charges against 10 individuals involved in a penny s tock scheme. In the scheme, the individuals offered and sold penny stock in undisclosed “blank check” companies bound for reverse mergers while misrepresenting to the public that they were promising startups with business plans. Most of the blank check companies were sold for a total of approximately $6 million in ill-gotten gains.

 More information can be found here.

Advisor accused of stealing $20 million from customers.

The SEC charged a New York City-based financial advisor for allegedly stealing approximately $20 million from customers to fund his own brokerage accounts and then squandering the bulk of the money in highly unprofitable options trading. Criminal charges were also filed against the individual by the U.S. Attorney’s Office for the Southern District of New York.

More information on the case can be found here.

Consumer Financial Protection Bureau (CFPB)

FDCPA violators face $50,000 CMP and other penalties.

The CFPB announced an enforcement action against a nationwide debt collection operation for the alleged use of deceptive threats of criminal prosecution and jail time in order to intimidate consumers into paying debts for bounced checks. The company also convinced consumers that they were required to enroll in a costly financial education program to avoid criminal charges. The CFPB action, if approved, would require the end of the illegal activities, a civil money penalty of $50,000, and new consumer disclosures and oversight of their program.

More information can be found here.

Lawsuit filed against robo-calling operation.

The CFPB filed a lawsuit against the ringleaders of a robo-call phantom debt collection operation, their companies, and their service providers for the alleged deployment of automated calls aimed at threatening, harassing, and deceiving consumers in the attempt to collect certain debts.

More information can be found here.

Mortgage lender to pay $250,000 penalty for deceptive ads.

In April the CFPB took action against a mortgage lending company for deceptive advertising practices, including ads that led consumers to believe that the company was affiliated with the U.S. government. The CFPB has issued a civil money penalty of $250,000 to the California-based mortgage lender for ads containing misrepresentations about loan interest rates and estimated monthly payments, including whether the interest rate was fixed or variable.

More information can be found here.

Bank refunds $49 million in illegal fees to consumers.

The CFPB took action against a bank for charging overdraft fees to consumers who had not opted-in for overdraft coverage. The bank also charged overdraft and non-sufficient funds fees on its deposit advance product despite claims that it would not. The bank was fined $7.5 million for its illegal actions, and was ordered to refund hundreds of thousands of consumers approximately $49 million in fees.

More information can be found here.

National Credit Union Administration (NCUA)

Florida credit union liquidated.

The NCUA liquidated a Florida credit union after determining that the credit union had violated various provisions of its charter, bylaws and federal regulations. The credit union had served 616 members and had assets of $3 million. 

More information can be found here.

Seven individuals banned.

The NCUA announced a prohibition against seven individuals from participating in the affairs of any federally insured financial institution at the beginning of April. The individuals have pleaded guilty to crimes ranging from bank theft and embezzlement to bank fraud. The individuals were asked to pay restitution in amounts ranging from $50,000 to $15 million.

More information on the enforcement actions can be found here.

$520,440 in grants awarded. 

Through the first Community Development Revolving Loan Fund grant round in 2015, the NCUA’s Office of Small Credit Union Initiatives has awarded 153 low-income credit unions a total of $520,440 in grants for financially serving underserved communities.

More information can be found here.

Federal Reserve Bank

Small Bank Holding Company Policy Statement expanded. 

The Federal Reserve Board issued a final rule expanding the applicability of its Small Bank Holding Company Policy Statement and also applying it to certain savings and loan holding companies. The rule implements a law passed in December 2014 and raises the asset threshold of the policy statement from $500 million to $1 billion in total consolidated assets, among other things.

The Federal Reserve press release can be found here.

Regulation D changes proposed. 

The Federal Reserve Board requested public comment on proposed technical changes to Regulation D concerning the calculation of interest payments on certain balances maintained by the depository institutions at Federal Reserve banks. Comments are requested within 30 days of publication.

More information can be found here.

Information released on the operating structure of LISCC program. 

The Federal Reserve Board released information concerning the operating structure of the Large Institution Supervision Coordinating Committee (LISCC) supervisory program. The LISCC program was established in 2010 to oversee and supervise the largest, most systemically important financial institutions.

The changes are detailed here.

Department of Justice

Individuals sentenced in $29 million Medicare fraud conspiracy. 

The DOJ announced charges against a Detroit adult day care center and two home health care company owners for their roles in a Medicare fraud scheme. The individuals involved were sentenced to five, ten, and four years in prison for their respective roles in the scheme, and were asked to pay between $589,516 and $8.4 million. Charges included conspiracy to commit health care fraud, conspiracy to receive health care kickbacks, and destruction of documents in connection with a federal investigation.

More information on the charges can be found here.

$21.75 million for alleged False Claims Act violations. 

A Texas-based medical center agreed to pay over $21 million to settle allegations that it violated the Stark Statute and the False Claims Act by engaging in improper financial relationships with referring physicians. The allegations arose from a lawsuit filed by three whistleblowers, who will receive almost $6 million as a reward for the recoveries announced in the lawsuit.

More information on the case can be found here.

Officer pleads guilty to accepting over $78,000 in bribes. 

A former Virginia loan officer was charged and subsequently pleaded guilty for accepting more than $78,000 in bribes in return for recommending the approval of unqualified loan applications to the bank, among other misconduct. The individual admitted to intentionally ignoring the fact that one company had previously defaulted in 10 previous transactions guaranteed by the bank, causing the bank to lose almost $20 million.

More information on the charges can be found on the DOJ’s website here.

Doctor pleads guilty in $56 million fraud scheme. 

The DOJ announced charges against a Louisiana doctor who pleaded guilty to federal health care fraud charges. Allegedly the doctor wrote false home health care certifications used in a multi-million dollar Medicare fraud scheme. He is scheduled to be sentenced in August.

More information on the case can be found here.

Individuals plead guilty to Sherman Act violations. 

Two real estate investors from California agreed to plead guilty for their roles in bid rigging and fraud conspiracies at public real estate foreclosure auctions. Allegedly, the individuals conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions.

More information about the charges filed can be found here.

Complaint filed in False Claims Act violations. 

The United States has filed a complaint against a mortgage lender headquartered in Detroit. The complaint maintains that the lender violated the False Claims Act by improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA).

More information about the scheme can be found on the DOJ's website.

Bank and subsidiary to pay $2.519 billion for wire fraud scheme. 

A wholly-owned subsidiary in London agreed to plead guilty to wire fraud for its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark interest rate used in financial products and transactions around the world. The bank and its subsidiary together will pay $775 million in criminal penalties to the Justice Department for their crimes. Together with approximately $1.744 billion in regulatory penalties and disgorgement—$800 million as a result of a Commodity Futures Trading Commission (CFTC) action, $600 million as a result of a New York Department of Financial Services (DFS) action, and $344 million as a result of a U.K. Financial Conduct Authority (FCA) action—the Justice Department’s criminal penalties bring the total amount of penalties to approximately $2.519 billion.

More information on the case can be found here.

Other Regulatory Bodies

$3.3 million monetary judgment assessed against payment processors. 

At the end of March, an Independent Sales Organization (ISO) and its principles settled Federal Trade Commission (FTC) charges that they illegally processed more than $26 million in unauthorized consumer charges. The stipulated court order settling the FTC’s charges imposes a $3.3 million monetary judgment against the ISO. Its principals will pay $150,000 and turn over personal assets totaling nearing $1.2 million. More information on the settlement can be found here.

Credit repair scam shut down. 

Actions taken by the FTC have resulted in the end of a credit repay scam company that allegedly used false affiliation with the FTC to market bogus credit repair services to Spanish-speaking consumers. The company has ceased operations and the defendants’ assets are frozen.

More information on the FTC request can be found here.

Statements released on compromised credentials and destructive malware. 

The Federal Financial Institutions Examination Council (FFIEC) released two statements concerning ways that financial institutions can identify and mitigate cyber-attacks that compromise user credentials or use destructive software, or malware. The FFIEC also provided information on what institutions can do to prepare for and respond to these threats. The OCC and FDIC have published similar bulletins.

More information can be found here.

Executive Order takes action against cybercriminals. 

On April 1^st, the President signed an Executive Order “Blocking the Property of Certain Persons Engaging in Significant Malicious Cyber-Enabled Activities,” which enables sanctions to be imposed upon individuals and entities determined to be responsible for or complicit in malicious cyber-enabled activities.

The Order can be read here.

Phantom debts operation charged. 

The FTC has obtained a court order temporarily halting a fake debt collection scam located in Illinois that was allegedly using illegal threats and intimidation tactics to coerce consumers to pay payday loan debts they either did not owe, or did not owe to the defendants.

More details about the case can be found here.

Debt brokers settle charges with FTC. 

Two debt brokers agreed to settle FTC charges that they exposed highly sensitive information about tens of thousands of consumers while trying to sell portfolios of consumer debt on a public website. The website hosting the sensitive information was taken down, and the brokers were ordered to notify the affected consumers that their information had been exposed and of steps they could take to protect themselves.

More information on the settlement can be found here.