Category: Financial Services Law

SEC Staff Meets with IRS to Discuss Tax Implications of a Floating Net Asset Value (NAV)

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SEC staff recently met with staff members of the IRS to discuss the tax implications of adopting a floating net asset value (NAV) for money market funds. The discussion centered on the tax treatment of small gains and losses for investors in money market funds, and the IRS reportedly told the SEC there is limited flexibility in interpreting current tax law. A floating NAV could require individual and institutional investors to regard every money market fund transaction as a potentially taxable event.

Investors would have to determine how to match purchases and redemptions for purposes of calculating gains, losses and share cost basis. The SEC reached out to the IRS as it continues to consider measures, including a floating NAV, to enable money market funds to better withstand severe market disruptions.

For additional discussion of money market reform, please see “SEC Debates on Money Market Reforms Continue” in our January 2013 and October 2012 updates.

Sources: John D. Hawke, Jr., Economic Consequences of Proposals to Require Money Market Funds to ‘Float’ Their NAV, SEC Comment Letter File No. 4-619, November 2, 2012; Christopher Condon and Dave Michaels, SEC Said to Discuss Floating NAV for Money Funds with IRS, Bloomberg, March 7, 2013; Joe Morris, SEC Sounding Out IRS on Floating NAV, Ignites, March 7, 2013.

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U.S. Commodity Futures Trading Commission (CFTC) Grants No-Action Relief for End Users from Swap Reporting Requirements

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On April 9, 2013, the Division of Market Oversight of the U.S. Commodity Futures Trading Commission (CFTC) issued a no-action letter delaying the swap reporting compliance deadlines for end users and other swap counterparties that are not swap dealers or major swap participants (non-SD/MSP counterparties).  The relief provided to market participants is effective immediately.

The CFTC had issued regulations setting forth various reporting requirements for swap transactions (Part 43 — real-time reporting for swap transactions, Part 45 — transactional data reporting to a registered swap data repository, and Part 46 — historical swap data reporting) of the CFTC’s regulations. The rules had established a deadline of April 10, 2013 for swap counterparties that are not swap dealers or major swap participants (non SD/MSP counterparties). Citing implementation concerns involving technological and operational capabilities, a number of market participants requested that the Division of Market Oversight provide a six-month extension of the compliance deadline.  The CFTC’s April 9 no-action  letter does not grant the full six-month extension requested, but provides certain time-limited no action relief to nonSD/MSP swap counterparties as described below.

1.          No-Action Relief for Reporting of Interest Rate and Credit Swaps

The letter extends no-action relief for end users’ interest and credit swaps reporting untilJuly 1, 2013.  However, non SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), must comply with reporting requirements under Part 43 and 45 on April 10, 2013.

2.         No-Action Relief for Reporting of Equity, Foreign Exchange and other Commodity Swaps

The no-action relief for end users who engage in swaps in other asset classes (e.g., equity, foreign exchange, and other commodities) is extended until August 19, 2013.  For non-SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), the no-action relief extends until May 29, 2013.

3.         No-Action Relief for Historical Swap Data Reporting Under Part 46

The letter also extends no-action relief to end users’ Part 46 historical swap data reporting for all swap asset classes until October 31, 2013.  For non SD/MSP swap counterparties that are “financial entities,” as defined in Section 2(h)(7)(C), the Part 46 no-action relief extends until September 30, 2013.  Any pre-enactment or transition swap entered into prior to 12:01 a.m. on April 10, 2013 is reportable as a historical swap.

4.         Compliance Date for Recordkeeping Obligations has not been Extended

The letter also confirms that the no-action relief provided for reporting requirements doesnot impact any Dodd-Frank-related recordkeeping obligations applicable to SDs, MSPs or end users.  Thus, for historical swaps, end users must maintain records under the Part 46 rules for any such swaps entered into prior to April 10, 2013.   With respect to swaps entered into on or after April 10, end users must maintain records under the Part 43 and 45 rules, and obtain a CFTC Interim Compliant Identifier for this purpose by April 10, 2013.

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Second Circuit Bars Criminal Defendant from Accessing Assets Frozen by Regulators

Katten Muchin

The US Court of Appeals for the Second Circuit recently upheld a district court’s refusal to release nearly $4 million in assets frozen by the Securities and Exchange Commission and the Commodity Futures Trading Commission to help a defendant fund his criminal defense.

Stephen Walsh, a defendant in a criminal fraud case, had requested the release of $3.7 million in assets stemming from the sale of a house that had been seized by regulators in a parallel civil enforcement action. In denying Walsh’s motion to access the frozen funds, the US District Court for the Southern District of New York found that the government had shown probable cause that the proceeds had been tainted by defendant’s fraud, and were therefore subject to forfeiture. Though Walsh and his wife had purchased the home in question using funds unrelated to the fraud, Walsh ultimately acquired title to the home pursuant to a divorce settlement in exchange for a $12.5 million distributive award paid to his wife, at least $6 million of which, according to the court, was traceable to the fraud.

Agreeing with the District Court, the Second Circuit found that although the house itself was not a fungible asset, it was “an asset purchased with” the tainted funds from the marital estate by operation of the divorce agreement and affirmed the denial of defendant’s request. Further, since Walsh’s assets did not exceed $6 million at the time of his arrest, under the Second Circuit’s “drugs-in, first-out” approach, all of his assets became traceable to the fraud.

U.S. v. Stephen Walsh, No. 12-2383-cr (2d Cir. Apr. 2, 2013).

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Key Financial Industry Regulatory Authority (FINRA) Regulatory Focus of 2013: Retail Sales of Complex Products, According to Annual Letter [VIDEO]

The National Law Review recently published an article, Key Financial Industry Regulatory Authority (FINRA) Regulatory Focus of 2013: Retail Sales of Complex Products, According to Annual Letter [VIDEO], written by Mark T. Carberry with Neal, Gerber & Eisenberg LLP:

Neal Gerber

In January, the Financial Industry Regulatory Authority (FINRA) published its annual letter identifying its regulatory and examination priorities for 2013, a document intended to “represent [FINRA’s] current assessment of the key investor protection and market integrity issues on which [FINRA] will focus in the coming year.”

Although numerous such issues were identified by FINRA in its letter, including issues relating to the sale of private placement securities, anti-money laundering compliance, insider trading, margin lending practices, and algorithmic trading, a substantial focus for 2013 relates to suitability concerns and the sale of complex products to retail investors.

Economic Environment Sharpens FINRA’s Concern

FINRA specified in its letter a number of current general economic factors giving rise to concerns about retail investors purchasing complex products:

  • FINRA believes the “slow growth, low-interest rate environment…” has challenged retail customers to seek returns outside their stated risk tolerance;
  • “[A]n unprecedented compression of credit risk premiums and yields…;”
  • The fact that retail investors are, therefore, increasingly transferring funds from equity to debt markets;
  • Retail investor “appetite for yield…” has increased prices on investment-grade and high-yield debt issues, limiting substantially upside growth while exacerbating risk of loss.

In light of the above factors, FINRA expressed its particular concern “about sales practice abuses, yield-chasing behaviors and the potential impact of any market correction, external stress event or market dislocation on market prices.”

3 Complex Products Earn Particular FINRA Scrutiny

While FINRA’s assessment again identifies numerous complex products in previous annual reviews, including non-traded REITs and leveraged and inverse ETFs, FINRA singled-out the following three “recently surfaced…” products as potentially unsuitable for retail investors in the current economic environment, given their underlying market, credit and liquidity risk factors:

  • Business Development Companies (BDCs): BDCs, typically closed-end investment companies, are highlighted due to, among other things, their investment in the corporate debt and equity of private companies;
  • Leveraged Loan Products: These adjustable-rate loans are extended by financial institutions to companies with low credit quality;
  • Commercial Mortgage-Backed Securities: FINRA is concerned retail investors are not being advised by their registered representatives of the “considerable risks given today’s low-interest-rate, low-yield environment.”

FINRA’s Recommended Supervisory Points of Emphasis

Supervisory policies and procedures regarding the sale of complex products to retail investors will be subject to particular scrutiny in 2013. FINRA’s Regulatory Notice 12-03 (“Complex Products-Heightened Supervision of Complex Products”), offers substantial guidance regarding heightened supervisory procedures that may be appropriate. In brief, some of these supervisory procedures may include:

  • Suitability: Is there a process to ensure the mandatory suitability analyses have been undertaken, particularly in light of FINRA’s revised suitability rule (FINRA Rule 2111)?
  • Post-Approval Review: Is there a supervisory process in place to reassess – post-sale – the performance and risk profile of existing complex products? Does this process also capture any complaints received from customers relating to a particular complex product?
  • Training: Registered representatives who recommend complex products must have a thorough understanding of all features and risks of a given product to enable them to articulate such features and risks to retail clients. Have sufficient resources been allocated to such training, and is there a process in place to ensure this training was utilized and effective?
  • Financial Sophistication of Clients: FINRA recommends that firms adopt the approach mandated for options trading accounts – that financial advisors must have a reasonable basis to believe that a retail client is sufficiently knowledgeable in financial matters, that he or she is capable of evaluating the risks of a recommended transaction and that the client can bear the associated financial risks.
  • Discussions with the Client: In recommending a complex product, a registered representative should thoroughly discuss all features of the product, how the product is expected to perform under different market conditions, the risks of the product and potential returns and the costs of the product. Fundamentally this should be undertaken in a manner most likely to facilitate the client’s understanding of the product.

In sum, as advised in its letter, FINRA is “particularly concerned about firms’ and registered representatives’ full understanding of complex or high-yield products, potential failures to adequately explain the risk-versus-return profile of certain products, as well as a disconnect between customer expectations and risk tolerances.”

For these reasons, supervisory procedures regarding sales of complex products to retail investors in large part must be designed – and enforced – with the intent to give financial advisors the ability to provide credible, substantive responses to the regulatory inquiry, “How did you educate yourself regarding the particular features and risk factors of this product?” and “How did you effectively communicate that information to your (suitable) client?”

© 2013 Neal, Gerber & Eisenberg LLP

Securities and Exchange Commission’s (SEC) Rule 10b5-1 Trading Plans Under Scrutiny

The National Law Review recently published an article, Securities and Exchange Commission’s (SEC) Rule 10b5-1 Trading Plans Under Scrutiny, written by the Financial, Corporate Governance and M&A Litigation Group of Barnes & Thornburg LLP:

Barnes & Thornburg

 

For more than a decade, corporate officers and directors of publicly traded companies have relied on trading plans, known as Rule 10b5-1 trading plans, in order to trade stock in their companies without running afoul of laws prohibiting corporate “insiders” from trading on material information not known to the general public. Historically, effective 10b5-1 plans have provided corporate insiders with an affirmative defense to allegations of unlawful insider trading.

Such plans typically involve a prior agreement between a corporate executive or board member and his or her broker. Under such agreements, the insider would provide standing trading instructions to the broker, requiring the broker to trade at a set stock price or a set time, for example. The broker would then effect the trade at the required price or time, regardless of the information held by the insider.

Recently, notwithstanding the Securities and Exchange Commission’s (SEC) longtime knowledge of potential abuses, such 10b5-1 plans have been under fire. In a Nov. 27, 2012, article in the Wall Street Journal titled “Executives’ Good Luck in Trading Own Stock,” the authors aired several complaints about such plans, including that “[c]ompanies and executives don’t have to file these trading plans with any federal agency. That means the plans aren’t readily available for regulators, investors or anyone else to examine. Moreover, once executives file such trading plans, they remain free to cancel or change them—and don’t have to disclose that they have done so. Finally, even when executives have such a preset plan, they are free to trade their companies’ stock at other times, outside of it.” The article went on to chronicle several purported abuses by officers and directors of such plans.

The current regulatory environment has simultaneously raised suspicions about plans and trades that are innocent, and potentially provided shelter for others that may be less so. In fact, in a Feb. 5, 2013, article in the Wall Street Journal entitled “SEC Expands Probe on Executive Trades,” the author noted that “[t]he Securities and Exchange Commission, expanding a high-profile investigation, is gathering data on a broad number of trades by corporate executives in shares of their own companies, according to people familiar with the probe.”

It would appear, from news like this, that the SEC is concerned that corporate insiders are adopting or amending 10b5-1 plans when in possession of non-public information that might affect market participants’ decision to trade in the company’s stock. Such changes could nullify the use of a 10b5-1 plan as a defense.

Seemingly in reaction to the perceived manipulation of 10b5-1 plans, the Council of Institutional Investors (CII) submitted a letter to the SEC on Dec. 28, 2012, requesting that the SEC implement rulemaking to impose new requirements with respect to Rule 10b5-1 trading plans. The CII letter calls for company boards of directors to become explicitly responsible for monitoring 10b5-1 plans, which undoubtedly will subject boards to increased scrutiny by the SEC. In addition, the CII letter proposes stricter regulatory rules including:

  • Adoption of 10b5-1 plans may occur only during a company open trading window
  • Prohibition of an insider having multiple, overlapping 10b5-1 plans
  • Mandatory delay of at least three months between 10b5-1 plan adoption and the first trade under the plan
  • Prohibition on frequent modifications/cancellations of 10b5-1 plan

The CII also advocates pre-announced disclosure of 10b5-1 plans and immediate disclosure of plan amendments and plan transactions. Under the CII’s suggested new rules, a corporate board also would be required to adopt policies covering 10b5-1 plan practices, monitor plan transactions, and ensure that such corporate policies discuss plan use in a variety of contexts. A similar set of suggestions can be found in Wayne State University professor Peter J. Henning’s Dec. 10, 2012, article, “The Fine Line Between Legal, and Illegal, Insider Trading,” found online at:  http://dealbook.nytimes.com/2012/12/10/the-fine-line-between-legal-and-illegal-insider-trading/.

Given the uncertainty in the market concerning the current use of Rule 10b5-1 plans and the future of such plans, companies or individuals who may be subject to Rule 10b5-1 plans and/or future regulations in this area should consult with counsel before adopting or amending such plans.

© 2013 BARNES & THORNBURG LLP

Private Equity Beware: Securities Exchange Commission (SEC) Official Predicts Increased Scrutiny, Enforcement Action in 2013

The National Law Review recently published an article, Private Equity Beware: Securities Exchange Commission (SEC) Official Predicts Increased Scrutiny, Enforcement Action in 2013, written by Mark T. Carberry with Neal, Gerber & Eisenberg LLP:

Neal Gerber

In late January, the SEC published remarks from a high-ranking SEC official that included projections that the private equity industry would see more scrutiny and enforcement in 2013. “It’s not unreasonable to think that the number of [enforcement] cases involving private equity will increase,” said Bruce Karpati, Chief of the SEC Enforcement Division’s Asset Management Unit.* In his comments, Karpati rooted his prediction in private equity’s “significant growth spurt” preceding the financial crisis, the substantial increase in assets under management, and the fact that only recently have many private equity managers become registered investment advisers.

VALUATION & CONFLICTS OF INTEREST IN CROSSHAIRS

The misconduct that the SEC is most likely to target falls under two broad categories: valuation and conflicts of interest, according to Karpati.

As to valuation, Karpati described one form of manager misconduct that occurs when assets are “written up” during a fund raising period, only to be immediately written down after the fund raising period closes.

Karpati further identified the following common conflicts of interest that require control and disclosure:

  • Conflicts between the profitability of the private equity management firm and the best interests of investors, particularly where the firm is publicly traded;
  • Conflicts that arise when expenses are shifted from the management firm to the funds;
  • Conflicts that arise in charging additional fees to the portfolio companies where allowable fees are poorly defined in the partnership agreement;
  • Conflicts relating to the challenges of managing different clients, different investors and different products “under the same umbrella …,” with the potential that “preferred clients” will be favored at the expense of others;
  • Conflicts generated by a manager’s other business interests, including the possibility of diverting investment opportunities.

COOS/CFOS ‘CRITICAL’ IN MEETING FIDUCIARY DUTIES

Karpati deemed the roles of chief operating officer and chief financial officer “critical” in ensuring a firm satisfies its fiduciary duties to clients. This is true due to the unique, broad perspective they enjoy in running the business of the manager.

Karpati specified a number of “best practices” that private equity firms should consider:

  • Compliance risk explicitly should be integrated in overall, enterprise risk management;
  • COOs, CFOs and compliance personnel should proactively identify and resolve practices giving rise to conflicts of interest;
  • Firms should implement a set of compliance procedures appropriate for the particular business model in place;
  • COOs and CFOs should act as investor advocates, and be sufficiently empowered in the firm by, for example, securing membership on important, decision-making firm committees.

Karpati concluded his remarks by encouraging collaboration with legal and compliance resources whenever potential conflict of interest issues are identified.

Note:  The Asset Management Unit is one of five specialized units within the SEC’s Division of Enforcement, each designed to address specific areas of the financial markets. The other units are the Market Abuse Unit, the Structured and New Products Unit, the Foreign Corrupt Practices Act Unit, and the Municipal Securities and Public Pension Unit.

© 2013 Neal, Gerber & Eisenberg LLP

Recent Consumer Financial Protection Bureau “CFPB” Mortgage Rules to Absorb and Implement

Barnes & Thornburg LLP‘s Financial Institutions Practice Group recently had an article, Recent Consumer Financial Protection Bureau “CFPB” Mortgage Rules to Absorb and Implement, featured in The National Law Review:

Barnes & Thornburg

 

January 2013 was a very busy month for the Consumer Financial Protection Bureau in promulgating rules relating to consumer mortgage lending. The CFPB promulgated seven rules pertaining to consumer mortgage lending during January 2013:

  • Ability to Repay (ATR) and Qualified Mortgage (QM) Standards under TILA/Regulation Z
  • Escrow Requirements for Higher-Priced Mortgages Under TILA/Regulation Z
  • High-Cost Mortgage and Homeownership Counseling Amendments to TILA/Regulation Z and Homeownership Counseling Amendments to RESPA/Regulation X
  • RESPA/Regulation X and TILA/Regulation Z Mortgage Servicing
  • Appraisals for Higher-Priced Mortgage Loans (issued jointly with other agencies)
  • Disclosure and Delivery Requirements for Copies of Appraisals and Other Written Valuations Under ECOA/Regulation B
  • Loan Originator Compensation Requirements Under TILA/Regulation Z

    With so many new CFPB rules, there is much to be learned and absorbed by loan originators, mortgage brokers, mortgage lenders, and mortgage servicers between now and the dates on which such rules will go into effect. With the exception of the High-Cost Mortgage and Homeownership Counseling Amendments to TILA/Regulation Z, the Homeownership Counseling Amendments to RESPA/Regulation X and the Escrow Requirements for Higher-Priced Mortgages rule, which will go into effect on June 1, 2013, and certain limited provisions contained in the Loan Originator Compensation rule, which will also go into effect on June 1, 2013, all of these rules have effective dates in January 2014, one year after their respective promulgation dates.

    Although each of these rules is important and poses certain compliance challenges, we will summarize in this Alert two of the most significant rules (largely due to their very widespread applicability and their overall complexity).  These are (1) the ATR and QM Standards rule; and (2) the Loan Originator Compensation rule.

    ATR and QM Standards

    The ATR and QM Standards rule, together with accompanying preamble, explanations and commentary, is over 800 pages long. The rule, among other things, implements a Dodd-Frank Act amendment to TILA requiring a consumer mortgage creditor, before originating a mortgage loan, to consider the borrower’s ability to repay.  The new rule allows a creditor to satisfy this requirement by: (1) satisfying the general ATR standards, which would require the creditor to consider eight different and discrete factors relating to the borrower’s ability to repay (generally using reasonably reliable third-party records to verify the information considered); (2) refinancing a “non-standard mortgage” into a “standard mortgage”; (3) originating a “rural balloon-payment QM” if, but only if, the creditor qualifies under a rigorous standard under which few creditors would qualify (creditors must have less than $2 billion in assets, must originate no more than 500 first-lien mortgages, and must originate at least 50 percent of the first-lien mortgages in counties that are rural or underserved); or (4) originating a QM.

    The advantage of meeting the QM standards is that, in general, the creditor will obtain an irrebuttable presumption of the borrower’s ability to repay the mortgage, which would block most lawsuits.  However, if the mortgage is a “higher-priced mortgage,” the creditor obtains only a rebuttable presumption of the borrower’s ability to repay the mortgage, which makes such loans more easily challenged in court.  A “higher-priced mortgage” is one which is priced 1.5 percentage points higher than a comparable loan in Freddie Mac’s Primary Mortgage Market Survey. This distinction will likely make “higher-priced mortgages,” or so-called subprime loans, less available.  In this regard, some pundits have predicted that, in the future, only mortgages meeting the QM standards and that are not “higher-priced mortgages” or “high-cost mortgages” will be generally available.

    To qualify as a QM the mortgage loan must satisfy the following standards:

    • provide for regular periodic payments that are substantially equal (except for ARMs and step-rate loans) that do not result in negative amortization or allow the borrower to defer repayment of principal, or result in a balloon payment (except for balloon-payment QMs);
    • have a term no greater than 30 years;
    • have total points and fees that do not exceed the permitted percentage of the loan amount (which is generally three percent (3%), subject to a few exceptions and refinements);
    • be underwritten taking into account the monthly payment and any mortgage related obligations, using the maximum interest rate that may apply during the first five years and periodic payments that will repay either (i) the outstanding principal and interest over the remaining term of the loan after the interest rate adjusts to the five-year maximum or (ii) the loan amount over the loan term;
    • for which the creditor considers and verifies the income or assets, and current debt, alimony, and child support obligations; and
    • for which the consumer’s debt-to-income ratio does not exceed forty-three percent (43%) when the loan is consummated.

    Notwithstanding these stringent QM standards, on a temporary basis, and for a period not to exceed a maximum of seven years, the CFPB created a second category of QMs that meet some, but not all, of the general QM standards. Simply stated, to qualify under this second category, the loan must meet the general product feature prerequisites for a QM and also satisfy the underwriting standards for purchase, guaranty, or insurance (as applicable) of either (i) the GSEs, as long as they operate under Federal conservatorship or receivership, or (ii) HUD, the VA, the USDA, or the Rural Housing Service.

    This rule also implements a provision of the Dodd-Frank Act that prohibits prepayment penalties, except for certain fixed-rate QMs where the penalty meets certain restrictions and the creditor offered the consumer an alternative mortgage loan without the penalty.

    Loan Originator Compensation

    In connection with the CFPB’s new Loan Originator Compensation rule, the CFPB published over 500 pages of background and prefatory material, explanations, and commentary. In this rule, the CFPB both expands and clarifies existing provisions in Regulation Z regulating loan originator compensation.  Many, if not most, of the provisions in the final rule have substantially identical counterparts in current Regulation Z § 1026.36(d) and the related Official Staff Commentary.

    However, the final rule has expanded treatment regarding the prohibited use of “proxies” for a term of a transaction in awarding loan originator compensation.  In this regard, the final rule clarifies the definition of a proxy as a factor that consistently varies with a transaction over a significant number of transactions, and the loan originator has the ability, directly or indirectly, to add, drop, or change the factor in originating the transactions.

    While retaining current Regulation Z’s general prohibition against subsequent downward adjustments to a loan originator’s compensation based upon changes in the transaction terms (e.g., to match or better the terms of a competitor), the final rule, unlike current Regulation Z, allows loan originators to reduce their compensation to defray certain unexpected increases in estimated settlement costs.

    Although the final rule generally prohibits loan originator compensation based upon the profitability of a transaction or a pool of transactions, it makes certain limited exceptions to this general rule with respect to various kinds of tax-advantaged retirement plans and other profit-sharing plans.  In this regard, mortgage-related business profits can be used to make contributions to certain tax-advantaged retirement plans and to provide bonuses and contributions to other plans that do not exceed 10 percent of the individual loan originator’s total compensation (but employers can elect whether or not to include contributions to tax-advantaged retirement plans in the “total compensation” calculations).

    Regulation Z currently provides that, where a loan originator receives compensation directly from a consumer in connection with a covered mortgage loan, no loan originator may receive compensation from another person in connection with the same transaction.  The Official Staff Commentary to current Regulation Z indicates, however, that this prohibition does not prohibit the employer of a loan originator from paying such loan originator a salary or an hourly wage in that instance.  As a pleasant surprise, the final rule permits mortgage brokers to pay their employees or independent contractors a commission on the particular mortgage loan, so long as the commission is not based upon the terms of such mortgage loan.

    The CFPB has elected not to issue a rule implementing a provision of the Dodd-Frank Act prohibiting consumers from paying upfront points or fees on a transaction if the loan originator’s compensation is paid by a person other than the consumer (either to the creditor’s own employee or to a mortgage broker).  Instead, the CFPB elected to grant a temporary exemption from this prohibition while it explores the potential effects of such a prohibition.

    The final rule also contains some provisions unrelated to loan originator compensation.  Specifically, in furtherance of other provisions in the Dodd-Frank Act, the final rule (1) prohibits mandatory arbitration clauses in connection with both residential mortgage loans and HELOCS; (2) prohibits the application or interpretation of provisions in residential mortgage loans and HELOCS and related agreements that would have the effect of barring claims in a court in connection with an alleged violation of Federal law; and (3) prohibits the financing of any premiums or fees for credit insurance (such as credit life insurance) in connection with a consumer credit transaction secured by a dwelling (but allows for credit insurance to be paid on a monthly basis).  These are the only provisions of the final rule which have a June 1, 2013, effective date.

    Other provisions in the final rule address (1) the additional obligations imposed on depository institutions in ensuring that their loan originator employees meet character, fitness, and criminal background standards similar to existing SAFE Act licensing standards and are properly trained; and (2) expanded recordkeeping requirements pertaining to loan originator compensation applicable to both creditors and mortgage brokers.

    Recess Appointment of Richard Cordray

    The Jan. 25, 2013 decision of the D.C. Circuit Court of Appeals invalidating recess appointments to the National Labor Relations Board, calls into question the recess appointment of Richard Cordray as head of the CFPB.  What impact this potentially invalid appointment will have on the CFPB regulations promulgated in January 2013 is undetermined at this time.

© 2013 BARNES & THORNBURG LLP

Operational and Technical Changes for FACTA Compliance – January 30 – February 1, 2013

The National Law Review is pleased to bring you information about the upcoming Global Financial Markets – Operational and Technical Changes for FACTA Compliance:

key topics

  • Assess the full implications of the finalized FATCA regulation
  • Coordinate an optimal approach to operational, infrastructural and technical changes under FATCA
  • Identify strategies to effectively manage client accounts
  • Integrate existing internal procedures with FATCA compliance
  • Understand what is expected by the IRS

key features

  • Pre-Conference Workshop on January 30, 2013 for an Additional Cost:
  • Pre-Conference Workshop: The Intergovernmental Agreements: Changing the Face of International Tax lead by JP&MF Consulting and Mopsick Tax Law LLP

event focus

FATCA is amongst the biggest topics of debate in financial institutions across the globe. The effect that it will have on these institutions cannot be underestimated and its operational impact on the existing systems is set to be both time consuming and costly. The ability to successfully align all key stakeholders, including operations, technology, risk, legal and tax, will determine the ultimate cost of FATCA compliance. Moving on from mere interpretive matters, this GFMI conference will not only address key FATCA requirements but also discuss the practical impacts of IGAs and strategies for achieving operational and infrastructural efficiency.

The Operational and Technical Changes for FATCA Compliance Conference will be a two and half day, industry focused event, specific to Senior Executives working in Banks, Insurance and Asset Management Companies. Attendees will address key FATCA requirements, while discussing the practical implications of IGAs and strategies for achieving operational and infrastructural efficiency.

Key Themes of the Operational and Technical Changes for FATCA Compliance Conference Include:

1. Challenges of FATCA regulations and prospects for the final regulation

2. Achieving operational and infrastructural efficiency

3. Coordinating existing AML/KYC procedures with FATCA compliance

4. FATCA from the FFI’s perspective 5. Beyond banking: the challenges of FATCA implementation

6. Coping with the withholding obligation under FATCA

This is not a trade show; our conference series is targeted at a focused group of senior level executives to maintain an intimate atmosphere for the delegates and speakers. Since we are not a vendor driven conference, the higher level focus allows delegates to network with their industry peers.

Operational and Technical Changes for FACTA Compliance – January 30 – February 1, 2013

The National Law Review is pleased to bring you information about the upcoming Global Financial Markets – Operational and Technical Changes for FACTA Compliance:

key topics

  • Assess the full implications of the finalized FATCA regulation
  • Coordinate an optimal approach to operational, infrastructural and technical changes under FATCA
  • Identify strategies to effectively manage client accounts
  • Integrate existing internal procedures with FATCA compliance
  • Understand what is expected by the IRS

key features

  • Pre-Conference Workshop on January 30, 2013 for an Additional Cost:
  • Pre-Conference Workshop: The Intergovernmental Agreements: Changing the Face of International Tax lead by JP&MF Consulting and Mopsick Tax Law LLP

event focus

FATCA is amongst the biggest topics of debate in financial institutions across the globe. The effect that it will have on these institutions cannot be underestimated and its operational impact on the existing systems is set to be both time consuming and costly. The ability to successfully align all key stakeholders, including operations, technology, risk, legal and tax, will determine the ultimate cost of FATCA compliance. Moving on from mere interpretive matters, this GFMI conference will not only address key FATCA requirements but also discuss the practical impacts of IGAs and strategies for achieving operational and infrastructural efficiency.

The Operational and Technical Changes for FATCA Compliance Conference will be a two and half day, industry focused event, specific to Senior Executives working in Banks, Insurance and Asset Management Companies. Attendees will address key FATCA requirements, while discussing the practical implications of IGAs and strategies for achieving operational and infrastructural efficiency.

Key Themes of the Operational and Technical Changes for FATCA Compliance Conference Include:

1. Challenges of FATCA regulations and prospects for the final regulation

2. Achieving operational and infrastructural efficiency

3. Coordinating existing AML/KYC procedures with FATCA compliance

4. FATCA from the FFI’s perspective 5. Beyond banking: the challenges of FATCA implementation

6. Coping with the withholding obligation under FATCA

This is not a trade show; our conference series is targeted at a focused group of senior level executives to maintain an intimate atmosphere for the delegates and speakers. Since we are not a vendor driven conference, the higher level focus allows delegates to network with their industry peers.