Insight

Washington Report 360 | August 21, 2020

Ongoing attention to inequity; DOJ; opinion on FCPA; DOJ, CFTC, and CFPB wach entered into compliance violation settlements

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Amy S. Matsuo

ESG and Regulatory Insights Lead, KPMG LLP

Ongoing attention to issues of inequity seen in FRB paper and blog series, and CFPB’s request for information on ECOA/Regulation B.
Department of Justice opinion letter on the Foreign Corrupt Practices Act, its first since 2014, responds to a prospective transaction inquiry.
DOJ, CFTC and CFPB each entered into settlements with entities to address compliance violations; the settlements included civil money penalties and restitution.

Banking

FRB
- Published a research paper examining the relationship between market power, income inequality, and financial instability
- Published, through the NY Fed, a fourth heterogeneity blog series on COVID-19 and credit outcomes
OCC:
- Released an update to its Bank Accounting Advisory Series, including new questions on troubled debt restructurings and allowances for credit losses
CFPB:
- Proposed a new category of seasoned qualified mortgages
- Extended the comment period on its RFI seeking opportunities to strengthen ECOA/Regulation B protections and regulatory compliance
- Settled with a bank on alleged violations of the EFTA/Regulation E, FCRA/Regulation V, and the CFPB’s UDAAP provisions in the marketing and sale of optional overdraft services; the settlement included civil money penalties and restitution

Capital markets

SEC:
- Adopted new procedures requiring public notice and approval before NMS fees become effective
CFTC:
- Coordinated with DOJ on enforcement actions settling allegations against a swap dealer for manipulative and deceptive conduct, spoofing, false statements, and compliance violations. DOJ entered into a related deferred prosecution agreement on charges of wire fraud and price manipulation. The settlements included imposition of a monitor and civil monetary penalties, disgorgement, and restitution.
- Proposed amendments to certain margin requirements for swap dealers and major swap participants
FINRA:
- Released an update and supplement to its Security Futures Risk Disclosure Statement
- Requested comment on the practice of 'pennying' in the corporate bond market

Other:

DOJ:
- Published an opinion letter regarding the FCPA and a fee paid by an investment adviser to a foreign government entity for services.
ARRC:
- Published transition resource guides for adjustable rate mortgages and private student loans
- Updated its best practices to encourage adherence to ISDA protocol during escrow period