Regulatory

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On June 6, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (collectively, the agencies) issued guidance to banking organizations on managing the risks associated with third party relationships. This final guidance reflects the 82 comment letters the agencies received from banking organizations, financial technology (fintech) companies and other third party providers on the proposed guidance released in July 2021 and replaces each agency’s existing guidance to ensure consistency in supervisory enforcement. While the agencies acknowledge that “[t]he use of third parties can offer banking organizations significant benefits, such as quicker and more efficient access to technologies, human capital, delivery channels, products, services, and markets,” they caution that the use of third parties “does not remove the need for sound risk management.” The agencies emphasize, however, that supervisory guidance does not have the force and effect of law and does not impose any new requirements on banking organizations.

On June 1, House Financial Services Committee Chair Patrick McHenry (R-NC) and

House Committee on Agriculture Chair Glenn “GT” Thompson (R-PA) released a discussion draft of legislation intended to fill gaps in digital asset regulation and provide a framework that will provide the crypto industry and consumers with some much-needed certainty. The proposal includes a…

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As discussed here and here, on October 26, 2022, the Securities and Exchange Commission (SEC) adopted final rules to implement Section 10D of the Securities Exchange Act. The final rules direct the New York Stock Exchange (NYSE) and Nasdaq to adopt listing standards requiring each listed issuer to implement a clawback policy. The clawback policy must mandate the recovery of incentive compensation that was awarded erroneously to executive officers, based on misstated financials.

On May 31, the Federal Deposit Insurance Corporation (FDIC) released its First Quarter 2023 Quarterly Banking Profile showing a first quarter aggregate net income of $79.8 billion for its 4,672 insured commercial banks and savings institutions, an increase of $11.5 billion from fourth quarter 2022. In a statement accompanying the release of the Profile, FDIC Chairman Martin Gruenberg stated: “Despite the recent period of stress, the banking industry has proven to be quite resilient. Net income still remains high by historical measures even after deducting one-time transactions, asset quality metrics are favorable, and the industry remains well capitalized.” Chairman Gruenberg did acknowledge, however, that these results include only a few weeks of the banking stress that began in early March. The more lasting effects of recent bank failures may not be fully apparent until after the second quarter.

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On May 23, Chairman Martin J. Gruenberg of the Federal Deposit Insurance Corporation (FDIC) delivered remarks at the Cities for Financial Empowerment Fund 2023 Bank On National Conference. One of the focuses of the Chairman’s remarks was on entities that misrepresent the availability of deposit insurance. ”[S]ince 2022, the FDIC has taken action against more than 85 entities that were misrepresenting the nature, extent, or availability of deposit insurance. In some instances, these firms had made misleading claims in connection with crypto assets while others had apparently developed fraudulent websites to trick consumers into believing they were doing business with a bank.”

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Today, the Federal Deposit Insurance Corporation (FDIC) published a notice of proposed rulemaking that would impose special assessments to recover losses to the Deposit Insurance Fund (DIF) arising from the FDIC’s protection of uninsured depositors in the wake of the two significant bank closings in March 2023. The Federal Deposit Insurance Act requires the FDIC to recover any losses to the DIF as a result of protecting uninsured depositors through a special assessment. The law also provides the FDIC authority to consider the types of entities that benefited the most from the assistance provided.

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On May 3, the Securities and Exchange Commission (SEC) adopted rule amendments regarding disclosures about repurchases of an issuer’s equity securities, or issuer stock buybacks. The final rule and fact sheet can be found here and here. The new rules include:

  • Disclosure by issuers of daily quantitative share repurchase information, either quarterly or semi-annually;
  • Inclusion of a checkbox indicating whether certain officers and directors traded in the relevant securities in the four business days before or after the announcement of the repurchase plan or program;
  • For each day on which a purchase was made, the number of shares repurchased and the average price, among other disclosures; and
  • Disclosures tagged using Inline XBRL.
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RICHMOND, Va. – Troutman Pepper client Burke & Herbert Financial Services Corp. (Nasdaq: BHRB), the bank holding company for Burke & Herbert Bank & Trust Company, has begun trading its common stock on the Nasdaq Capital Market® after completing a registration process with the United States Securities and Exchange Commission (SEC). Shares of the company’s common stock will continue to trade under the symbol “BHRB”, the same symbol under which the company’s securities were previously quoted on OTC Markets. Read a company press release about the listing.