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
On June 1, The Board of Governors of the Federal Reserve System (Board of Governors) and the California Department of Financial Protection and Innovation (CA DFPI) announced a mutual consent order with Silvergate Capital Corporation, a former leader in crypto lending, providing for the winding down of its operations.
Under the terms of the consent
As any Wall Street litigator knows, in the securities industry, it is typical for brokerage firms to incentivize their employed financial advisers with significant upfront compensation at the beginning of a relationship or even at the beginning of each new financial year. These up-front payments are often structured as “forgivable loans” and memorialized in promissory notes. However, if the employment relationship ends prematurely or the financial advisor fails to meet certain objectives and obligations such as revenue goals, repayment obligations can be triggered. Not surprisingly, litigation stemming from these promissory notes is commonplace before the Financial Industry Regulatory Authority (FINRA) in its arbitral forum, and these arbitrations only increase in volume as we step into more turbulent economic times when layoffs and resignations become commonplace in the industry.
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.
The idea for Troutman Pepper’s Financial Services Industry Group – and this new blog – came when we looked around the firm and realized that we had so many areas of legal specialty in which we were serving financial services clients. But by thinking of ourselves as legal specialists in particular areas – like consumer finance, commercial lending, M&A or bank regulatory – we were missing the opportunity to provide greater value to clients by integrating our teams across those legal practice areas.
On May 25, the Office of the Comptroller of the Currency (OCC) announced that it has revised its manual on bank enforcement actions to specifically address banks that exhibit or fail to correct persistent weaknesses. The OCC’s focus is on the larger and more complex banks it supervises.
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.”
Troutman Pepper client Payroc WorldAccess, LLC, (Payroc), a global payments leader, recently announced the acquisition of Atlantic Merchant Services, LLC, (Atlantic Merchant), a full-service merchant processing company based in Raleigh, North Carolina by one of Payroc’s subsidiaries. Payroc is backed by private equity firm Parthenon Capital who assisted Payroc in completing this acquisition. Read a company press release about the transaction.
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.