Subject to Inquiry

Subject to Inquiry

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Category Archives: Enforcement and Prosecution Policy and Trends

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Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

Payment Processor Challenges CFPB’s Allegation That It Engaged in Unfair Practices

The Consumer Financial Protection Bureau’s (“CFPB”) lawsuit against payment processor Intercept Corporation remains pending, and recent briefing sheds light on what could result in broad implications for the payment processing industry and CFPB enforcement at large. We previously reported on the CFPB’s suit against Intercept, pending in district court in North Dakota.  The CFPB alleges… Continue Reading
Enforcement and Prosecution Policy and Trends

California Court Hands CFPB a Noteworthy Victory Against CashCall, Inc.

In a closely watched case pending in the United States District Court for the Central District of California, the CFPB obtained a significant victory against CashCall Inc. (“CashCall”) and its affiliates.  The Court’s decision to grant the CFPB summary judgment on the issue of liability is noteworthy because it could have significant ramifications on a… Continue Reading
Energy Enforcement, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims

Court Holds FERC De Novo Review to Proceed as “Ordinary Civil Action”

Last week, a federal district judge ruled for the first time that the “review de novo” promised by section 31(d) of the Federal Power Act (“FPA”), 16 U.S.C. § 823b(d), will be “treated as an ordinary civil action requiring a trial de novo.”  FERC v. Maxim Power Corp., Civ. No. 3:15-30113-MGM, at 2 (D. Mass.… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends

BancorpSouth Bank Agrees to Pay More Than $10 million to Settle Charges of Redlining and Discrimination in Mortgage Underwriting and Pricing

On June 29, the Consumer Financial Protection Bureau (CFPB), the Department of Justice (DOJ), and BancorpSouth Bank (BancorpSouth) agreed to settle allegations of redlining and discrimination in violation of the Equal Credit Opportunity Act and the Fair Housing Act.  Notably, this case marks the second instance of the CFPB’s new approach to redlining analysis, which,… Continue Reading
Enforcement and Prosecution Policy and Trends

SEC Announces Settlement with Investment Advisory Firm Regarding Alleged Failure to Disclose Costs to Investors

On July 14, 2016, the Securities and Exchange Commission announced the settlement of an enforcement action against RiverFront Investment Group (“RiverFront”), an investment advisory firm, for failing to properly prepare clients for transaction costs. At issue is a wrap fee program, in which a subadviser uses a sponsoring brokerage firm to execute their trades on… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

CFPB’s Supervisory Highlights Regarding Auto Lending

The Consumer Financial Protection Bureau (“CFPB”) recently issued its Supervisory Highlights – Issue 12, Summer 2016 report, addressing, among other industries, automobile origination.  The report reflects supervisory activity generally completed between January 2016 and April 2016 and makes it clear that there is increased scrutiny and consumer complaint activity in the auto lending industry.  The… Continue Reading
Enforcement and Prosecution Policy and Trends

Prison Sentence for Executives in Contaminated Egg Case Highlights Food Safety Risks

Last Thursday, July 7, 2016, a divided panel of the U.S. Court of Appeals for the 8th Circuit upheld a three-month jail sentence against Austin “Jack” DeCoster and his son Peter, the CEO and COO respectively of Quality Egg LLC.  The CDC determined that Quality Egg was responsible for a salmonella outbreak that ultimately sickened… Continue Reading
Anti-Bribery and Corruption, Enforcement and Prosecution Policy and Trends

SEC Highlights Model Response to Evidence of FCPA Violations, Announces Non-Prosecution Agreements

On June 7, the Securities and Exchange Commission (SEC) announced two non-prosecution agreements (NPAs) following a pair of investigations into alleged violations of the Foreign Corrupt Practices Act (FCPA).  Both companies were ensnared by the FCPA through the conduct of their foreign subsidiaries.  The way the companies responded to the apparent violations provides a potential… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Securities and Commodities

A Circuit Split is Born. Eleventh Circuit Rules Declaratory Relief and Disgorgement Sought by the SEC Are Subject to 5-Year Statute of Limitations. Injunctive Relief is Not.

On May 26th, the Eleventh Circuit held that declaratory relief and disgorgement sought by the SEC are subject to the 5-year statute of limitations under 28 U.S.C. § 2462, but injunctive relief is not.  The court’s holding that § 2462 applies to disgorgement creates two circuit splits:  one with the D.C. Circuit, which has held… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

The SDNY Provides Guidance on a Company’s Duty to Disclose Government Investigations

Due to the absence of instructive case law and interpretative guidance from the U.S. Securities and Exchange Commission (SEC), companies are often left in the dark with regard to whether and/or when they should publicly disclose that they are under investigation.  The Southern District of New York recently provided much-needed guidance on the issue. On… Continue Reading
Election and Political Law, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities

AN IMPORTANT CHECK ON THE ABUSE OF GOVERNMENT AUTHORITY

As citizens of a nation founded on the rule of law, we depend upon law enforcement and prosecutors to protect us from harm and from those who infringe our liberty.  In exchange for this protection, we permit these public servants to exercise authority and at times great power.  Thankfully, and it should go without saying,… Continue Reading
Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

CFPB’s First-Ever Data Security Enforcement Action

Earlier this month, the Consumer Financial Protection Bureau (CFPB) made headlines by bringing its first enforcement action in the data security space.  Dwolla, Inc., an Iowa-based online payment processor, was the CFPB’s target.  According to CFPB Director Richard Cordray, “With data breaches becoming commonplace and more consumers using these online payment systems, the risk to… Continue Reading
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims, Securities and Commodities

SEC Describes Recent Efforts to Combat Pyramid Schemes and Affinity Frauds

Over the past two years, the Securities and Exchange Commission (SEC) has stepped up enforcement actions against pyramid schemes and related affinity frauds. Last week, in a speech at the University of Illinois at Chicago, Andrew Ceresney, director of the SEC’s Enforcement Division, addressed his division’s most recent efforts to combat these frauds. In particular,… Continue Reading
Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims

Developer Facing 230-Year Sentence Illustrates Necessity of Full and Accurate Disclosure

Demonstrating the importance of full and accurate disclosure, a Chicago commercial real estate developer faces a maximum sentence of 230 years in prison for misrepresenting his company’s finances. After a two-week trial, on February 24, a jury found Laurance Freed, president of Joseph Freed and Associates LLC (JFA), guilty of bank fraud, mail fraud, and… Continue Reading
Anti-Bribery and Corruption, Compliance, Enforcement and Prosecution Policy and Trends, Securities and Commodities

Key Takeaways From This Year’s Early FCPA Enforcement Actions

February has been a big month for U.S. Foreign Corrupt Practices Act (FCPA) enforcement. It started with the U.S. Securities and Exchange Commission (SEC) quietly resolving a string of relatively small matters.  Then, at the end of last week, the SEC and U.S. Department of Justice (DOJ) entered into a global resolution with VimpelCom in… Continue Reading
Enforcement and Prosecution Policy and Trends

Justice Scalia’s Death Could Affect Outcomes in Class Action Cases

Government investigations and white collar litigation matters often lead to class action lawsuits by plaintiffs. The Subject to Inquiry Blog takes this opportunity to highlight the potential effects the death of the late Justice Antonin Scalia may have on class action cases before the Supreme Court. Justice Scalia was a reliably consistent critic of federal… Continue Reading
Enforcement and Prosecution Policy and Trends

DOJ Fraud Section to Require Cooperation Certifications Before Corporate Settlement

Before settling with the U.S. Department of Justice’s Fraud Section, companies must now certify that they disclosed all information about individuals involved in the underlying misconduct. According to a recent Wall Street Journal article, the Fraud Section is developing a “certification process” whereby companies finalizing settlements with the department will have to certify to this… Continue Reading
Anti-Bribery and Corruption, Enforcement and Prosecution Policy and Trends, Fraud, Deception and False Claims

The SFO’s ‘Seize and Sift’ Procedure

R (on the application of Colin McKenzie) v Director of the Serious Fraud Office saw an unsuccessful attempt to judicially review the SFO’s currently in-use procedure for dealing with material that it has seized, and which may contain content subject to legal professional privilege (“LPP”). This ‘procedure’, set out in the SFO’s Operational Handbook, provides… Continue Reading
Anti-Money Laundering, Compliance, Enforcement and Prosecution Policy and Trends, Financial Institution Regulation, Fraud, Deception and False Claims

FinCEN Announces First Card Club AML Enforcement Action

Just in time for Christmas, the Financial Crimes Enforcement Network (FinCEN), the financial industry (including casinos and card clubs) regulator, announced its first-ever enforcement action against a card club, California’s Oaks Card Club (Oaks). The enforcement action, which carried a penalty of $650,000, is the latest in a string of actions against gaming enterprises and is… Continue Reading
Enforcement and Prosecution Policy and Trends, Financial Institution Regulation

The House Has Voted: Auto Lenders Prevail Over CFPB

As we predicted, auto lenders scored a significant victory last week in opposing the Consumer Financial Protection Bureau’s (CFPB’s) efforts to regulate the auto financing industry.  House Resolution 1737, The Reforming CFPB Indirect Auto Financing Guidance Act, passed the House with bipartisan support in a vote of 332-96. To recap, the bill challenges the CFPB’s… Continue Reading

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