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Riding the Regulatory Enforcement Train: FINRA Issues Reminder on Supervisory Liability for Chief Compliance Officers

On March 17, 2022, FINRA issued Regulatory Notice 22-10 (“Notice”), which reminds FINRA member firms and their associated persons of the scope of supervisory liability for Chief Compliance Officers (“CCO”). The Notice discusses this liability in the context of FINRA Rule 3110, which among other things, requires FINRA member firms to establish and maintain a system (including written procedures) to supervise the activities of each associated person in a manner that is reasonably designed to achieve compliance with applicable securities laws, regulations, and FINRA ...

Acting Comptroller Hsu Suggests a Potential Path Forward to Address Identified Gaps in the Regulatory Resolution Framework for Large Regional Banks

In the fourteen years since the 2008 financial crisis, significant actions have been taken by Federal banking agencies to make the largest financial institutions more resilient and less likely to fail and to require planning that would facilitate their orderly resolution, if necessary. These risk mitigation measures are tailored, however, with the most stringent requirements, and highest regulatory expectations, appropriately reserved for the eight U.S. banks designated as posing the greatest risk to financial stability (global systemically important banks, or GSIBs ...

SEC Announces Exam Priorities for 2022

On March 30, 2022, the U.S. Securities and Exchange Commission’s (“SEC”) Division of Examinations released its exam priorities for fiscal year 2022 (the “2022 Priorities”). As in years past, these exam priorities naturally follow from SEC rulemakings, statements, risk alerts and other guidance issued in the past year, and reflect practices or topics that may pose higher risk for referral to the SEC’s Division of Enforcement.

The 2022 Priorities include broader thematic “Significant Focus Areas,” which may be applicable to both broker-dealers and registered ...

SEC Announces Proposed Rule for Climate Risk and Greenhouse Gas Disclosures

On March 21, 2022, the U.S. Securities and Exchange Commission (“SEC”) announced a proposed rule (the “Proposed Rule”) that will require registrants to make certain climate disclosures in their registration statements and periodic filings with the SEC. Chairman Gary Gensler stated that the goal of the Proposed Rule is to “provide investors with consistent, comparable, and decision-useful information for making their investment decisions, and it would provide consistent and clear reporting obligations for issuers.” The Proposed Rule would require three main ...

United States Imposes Sanctions Related to Russia’s Invasion of Ukraine

Background

In February 2014, the Revolution of Dignity or Maidan revolution in Ukraine resulted in the ousting of Ukrainian President Viktor Yanukovych. In the months that followed, Russia annexed the Crimea region of Ukraine and supported separatist movements in the eastern regions of Luhansk and Donetsk. President Obama signed three Executive Orders in March 2014 imposing sanctions and prohibiting certain transactions because of Russia’s actions in Ukraine. Multiple Executive Orders relating to Russia followed over a period of years.

On February 21, 2022, Russia ...

CFPB Announces LIBOR Transition’s Final Rule, Amending Provisions of Regulation Z

On December 7, 2021, the Consumer Financial Protection Bureau (“CFPB”) published its final rule (“Rule”) facilitating the transition away from LIBOR for open-end and closed-end consumer financial products. The Rule amends provisions of Regulation Z, which implements the Truth in Lending Act to allow for the transition from U.S. dollar LIBOR to the Secured Overnight Financing Rate (“SOFR”) and other alternative reference rates. SOFR is deemed compliant as a replacement index whereas other alternative reference rates must pass the “comparability” or ...

Can New US Law Help Increase Financial Recovery and Reintegration of Survivors of Human Trafficking?

The following was co-authored by Moore & Van Allen Financial Regulatory Advice & Response Senior Counsel Sarah Byrne; Dr Leona Vaughn, Vulnerable Populations Lead for FAST at UN University Centre for Policy Research; and Professor Barry Koch, former Commissioner of the Liechtenstein Initiative and co-founder of the SII, and was published by the United Nations University Centre for Policy Research on January 27, 2022.

The damaging impact of the trafficking experience on survivors is multifold. The harm is physical, psychological, as well as financial, and long-term. The global ...

FINRA Closes Out 2021 with Further Guidance on Pandemic-Related Issues for Member Firms

After extensive retrospective review of FINRA Rule 4370, which covers member firm business continuity plan (“BCP”) requirements during times of business disruption (such as the COVID-19 Pandemic), FINRA issued its Retrospective Rule Review Report entitled “Business Continuity Planning and Lessons From the COVID-19 Pandemic.”[1]  In doing so, FINRA issued guidance and summarized stakeholder feedback on such topics as the inspection and registration of temporary/remote offices, Membership Application Program (“MAP”) compliance for those offices, and the ...

UPDATED: Term SOFR vs BSBY vs Ameribor in the Loan Market

This is an update to a previous post. This update highlights the formal endorsement of Term SOFR by the ARRC, expands the discussion to include Ameribor and dives more deeply into the issues associated with Term SOFR swaps resulting in a mismatch with any related hedge by the Lender.

The ARRC has endorsed (HERE) CME’s Term SOFR. One of the bigger pieces to this announcement and earlier related announcements (Scope of Use Cases), is that U.S. regulators will also permit Term SOFR Swaps, when one of the parties is an “end-user”. When looking only at the loan market, what new reference ...

Financial Services’ Role in Anti-Trafficking, Human Rights, and ESG is at Turning Point

Last month marked the tenth anniversary of the United Nations’ Human Rights Council adoption of the Guiding Principles on Business and Human Rights (“UNGPs”), setting forth the internationally-accepted framework for the role of businesses in promoting and protecting human rights. These principles highlight the risks businesses face in their activities that may be linked to human rights violations. According to the UNGPs, “[b]usiness enterprises should respect human rights. This means that they should avoid infringing on the human rights of others and should address ...

No More Dealer-to-Dealer LIBOR Swaps in the OTC Market?

In a press release (HERE) on June 8th, the Commodity Futures Trading Commission (the “CFTC”) published its first release in a series called the “SOFR First Transition Initiative” as a best practice. One goal for this sort of “best practice” is to impact the liquidity in LIBOR and SOFR swaps, thereby slowly (a) increasing the spread on LIBOR swaps and (b) tightening the spread on SOFR swaps. In other words, make LIBOR swaps more expensive and SOFR swaps less expensive. Even for non-dealers, this announcement is important as it is not only a major step in such non-dealers’ ...

Advisory: Canada Designates Proud Boys a Terrorist Entity

Canada has designated the Proud Boys as a terrorist entity, meaning that banks and other financial services providers will no longer be allowed to deal with or facilitate transactions concerning property controlled by the group. The restrictions will apply to U.S. financial institutions in their activities within Canada and will extend to cover the activities of Canadian institutions outside of Canada.

Fall 2020 Brings Increased Regulatory Focus on Financial Institution Detection of Human Trafficking

On October 15, 2020, the Financial Crimes Enforcement Network of the U.S. Department of Treasury (FinCEN) released its Supplemental Advisory on Identifying and Reporting Human Trafficking and Related Activity (Supplemental Advisory). The last time FinCEN provided guidance on identifying trafficking in anti-money laundering (AML) processes was in Guidance on Recognizing Activity that May be Associated with Human Smuggling and Human Trafficking – Financial Red Flags on September 11, 2014. The evolving tactics of human traffickers and behaviors of victims required ...

Modern Slavery Statement Guidance – Note to Financial Institutions

The United Kingdom Home Office has released guidance to companies that are required to make a public statement about human trafficking risks and prevention measures under the U.K. Modern Slavery Act of 2015.  Organizations are to address the emerging risks of exploitation at the company and in the supply chain caused by COVID-19 in their statement against modern slavery.

The guidance encourages careful consideration of the risks posed by changes in operations and supply chains that may result from the current economic crisis, including fluctuation in product or service demands and ...

Legislative and Bank Regulatory Actions to Assist Forbearance in a Pandemic World

By Kristina Whittaker and Ed O'Keefe.  For the last three weeks or so, the federal and state banking agencies, collectively and individually, have, with increasing urgency, called on financial institutions to meet the financial needs of customers impacted by the COVID-19. Congress has now codified some of the guidance in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). To assist our clients in understanding the scale and scope of the regulatory actions, we describe the state of play as we know it today. 

As first discussed in the article by our colleagues Neil ...

A Time of Testing – What Lawyers Can Do

A black swan has arrived – the Pandemic of 2020 and with it a bear market. As with previous black swan events, experts and leaders are in learning mode, with the facts and events evolving hourly. As my financial advisor told me, this event cannot be modeled. Nonetheless, there are lessons learned from past crises – we are facing not just a health crisis uprooting lives and businesses, but also we can expect significant economic impact. The event will have effects longer than initially predicted or imagined.

In such circumstances, what should be on in-house lawyers’ and leaders ...

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As government authorities around the world conduct overlapping investigations and bring parallel proceedings in evolving regulatory environments, companies face challenging regulatory and criminal enforcement dynamics. We help keep our clients up to date in these fast-moving areas and to serve as a thought leader.

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