In a July 6 joint press release, the Federal Reserve Board and FDIC announced that they have posted the public portions of annual resolution plans for large financial firms. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, bank holding companies with total consolidated assets of $50 billion or more and nonbank financial companies designated by the Financial Stability Oversight Council (FSOC) as systemically important periodically submit resolution plans to the FDIC and the Federal Reserve. A plan must describe the company’s strategy for rapid and orderly resolution under the U.S. Bankruptcy Code in the event of material financial distress or failure of the company. Each firm is required to submit a public section with a summary of the resolution plan that describes certain aspects, including the firm’s material entities and core business lines, and information on how the resolution plan would be executed. The agencies have also provided guidance requiring more detail in firms’ public plans, including greater detail on each material entity, a discussion of the strategy for resolving each material entity in a manner that mitigates systemic risk, a high-level description of what the firm would look like following resolution, and a description of the steps that each firm is taking to improve its ability to be resolved in an orderly manner in bankruptcy. The agencies are posting the public portions of the resolution plans, as provided by the firms, on the FDIC and Federal Reserve Board websites. The plans have not yet been reviewed by the agencies, which will now be beginning their review process.
As reported in the June 17, 2015 Roundup, federal financial regulators issued a final policy statement establishing joint standards for assessing the diversity policy and practices of financial institutions and other entities regulated by the OCC, FRB, FDIC, NCUA, CFPB or SEC. Goodwin Procter’s Banking, Consumer Financial Services and Labor & Employment practices have jointly issued a client alert providing additional analysis of the policy statement.
Enforcement and Litigation
On July 1, 2015, the SEC issued a consent order instituting administrative and cease-and-desist proceedings against the former auditor of three closed-end funds, an administrator of the Funds that provided compliance services and a former member of the Funds’ boards of trustees in connection with violations of auditor independence rules. Goodwin Procter’s detailed analysis of this enforcement action can be found here.
On June 11, the SEC announced that it had filed a complaint against an individual, Joshua Yudell, and his controlled entities for doing business as an unregistered broker. The SEC alleged that for a period of four years, Yudell and his controlled entities entered into agreements with securities owners pursuant to which he would obtain custody and control over their securities, attempt to sell the securities into the market through accounts at registered brokers, and then provide the net proceeds, minus Yudell’s fees, to the securities owners. The SEC also alleged that the securities of at least one of the issuers fell into the category of “penny stock” as defined in the federal securities laws. Yudell consented to an injunction and agreed to pay a total of $4.4 million, including disgorgement of estimated profits of $4.2 million, to settle the charges. The SEC issued a final order on June 22.
On July 23 from noon to 1 p.m. EDT, Goodwin Procter partners Jamie Fleckner and Scott Webster will host a complimentary webinar discussion on the Ninth Circuit's Tibble v. Edison, Int'l decision, highlighted in our quarterly newsletter, ERISA Litigation Update. They will analyze the implications of that ruling for ERISA litigation and fiduciary decision-making. To register for the webinar please click here.