James Stevens, co-leader of Troutman Pepper’s Financial Services Industry Group, was quoted in the May 13, 2024 S&P Global Market Intelligence article, “Latest FDIC Merger Proposal Threatens Approval Timelines, Due Diligence Process.”
Several Regulators Re-Propose Rules to Curb Incentive Compensation at Financial Institutions
On May 6, the Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Federal Housing Finance Agency (FHFA) issued a notice of proposed rulemaking and request for public comment to implement Section 956 of the Dodd-Frank and Wall Street Reform and Consumer Protection Act (Dodd-Frank). Under Section 956, the FDIC, OCC, FHFA, National Credit Union Association (NCUA), Securities and Exchange Commission (SEC), and Board of Governors of the Federal Reserve System (the Fed) are tasked with jointly prescribing regulations that (1) prohibit incentive-based compensation at covered financial institutions that encourages inappropriate risk-taking because it is excessive or could lead to material financial loss, and (2) require the disclosure of information concerning these compensation arrangements to the appropriate federal regulator.
Federal Banking Agencies Issue New Guidebook for Community Banks Managing Third-Party Relationships
On May 3, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (collectively, the agencies) released a guidebook aimed at assisting community banks in managing risks associated with third-party relationships (the TPRM Guide). The TPRM Guide builds upon the principles introduced in the third-party risk management guidance for banking organizations issued by the agencies in June 2023 (the June 2023 Guidance, discussed here) as well as the agencies’ community bank guide for conducting due diligence on fintech companies from October 2023 (discussed here) but does not displace or substitute that prior guidance.
Smooth Approval Outlook for Wintrust-Macatawa Deal Could Invite More US Bank M&A
James Stevens, co-leader of Troutman Pepper’s Financial Services Industry Group, was quoted in the May 7, 2024 S&P Global Market Intelligence article, “Smooth Approval Outlook for Wintrust-Macatawa Deal Could Invite More US Bank M&A.”
Republicans Seek ‘Shot Clock’ on Regulators’ Bank Merger Reviews
James Stevens, co-leader of Troutman Pepper’s Financial Services Industry Group, was quoted in the May 2, 2024 Banking Dive article, “Republicans Seek ‘Shot Clock’ on Regulators’ Bank Merger Reviews.”
Bank Board Insights Series Part VII: From Good to Great, Elevate Your Bank’s Performance with Boardroom Mastery!
James Stevens, co-leader of Troutman Pepper’s Financial Services Industry Group, was interviewed in the Travillian Next podcast episode “Bank Board Insights Series Part VII: From Good to Great, Elevate Your Bank’s Performance with Boardroom Mastery!“
Implications of the FTC’s Noncompete Ban on Financial Institutions
There has been a great deal of press about the Federal Trade Commission’s (FTC) vote to ban employee non-competition provisions and policies; see our firm’s fuller discussion here. While the FTC describes the rule as a comprehensive ban, it acknowledges that the rule does not apply to regulated financial institutions, and nonsolicitation clauses are still permitted.
FINRA’s First Disciplinary Action Targeting Firm’s Use of Social Media Influencers
The Financial Industry Regulatory Authority’s (FINRA) Enforcement Division recently announced its first settlement involving a firm’s supervision of social media influencers. The respondent, M1 Finance LLC (M1), is a financial technology company that provides self-directed trading to retail investors through its mobile application and website. In connection with FINRA’s targeted exam of M1’s use of social media influencers to acquire new customers, FINRA found that social media posts made by influencers on the firm’s behalf were not fair or balanced, or contained exaggerated, unwarranted, promissory, or misleading claims. According to FINRA, M1 also failed to establish, maintain, and enforce a reasonably designed supervisory system for its influencers’ social media posts, and failed to preapprove and preserve records of these retail communications.
The SEC Voluntarily Stays Climate-Related Disclosure Rules Pending Eighth Circuit Judicial Review
On April 4, the Securities and Exchange Commission (SEC) issued a stay on the implementation of its newly enacted climate impact disclosure rules. This decision is connected to a challenge to the rules currently pending in the U.S. Court of Appeals for the Eighth Circuit, which is a consolidation of numerous lawsuits that hit the SEC following the rule announcement on March 6. The SEC adopted a scaled-back version of its initial 2022 proposal, requiring large public companies to report their greenhouse gas emissions, climate-related risks to their businesses, and the financial harm caused by extreme weather events, in their registration statements and annual reports. The reporting requirements were to be rolled out in stages, with the largest filers beginning disclosures in 2025.
FDIC Announces Two More Consent Orders Containing Third-Party Risk Management and Fintech Partnership Orders
On March 29, the Federal Deposit Insurance Corporation (FDIC) announced two more consent orders containing provisions relating to banks’ third-party risk management programs with respect to banking as a service (BaaS) partnerships.