Weekly RoundUp
February 3, 2022

Federal Reserve Proposes New Supervisory Framework for Certain Holding Companies Engaged in Insurance Activities

In This Weekly Roundup Issue. The Board of the Governors of the Federal Reserve (Federal Reserve) proposed a new supervisory framework for certain holding companies engaged in insurance activities; the Consumer Financial Protection Bureau (CFPB) released its annual list of consumer reporting companies (CRCs); the U.S. Securities and Exchange Commission (SEC) proposed rule changes that would greatly expand the scope of Regulation ATS; and the SEC proposed amendments to the Form PF. These and other developments are discussed in more detail below.

Regulatory Developments

Federal Reserve Proposes New Supervisory Framework for Certain Holding Companies Engaged in Insurance Activities

On January 28, the Federal Reserve proposed guidance seeking public comment on a new supervisory framework for depository institution holding companies engaged in insurance activities. 

For background, the Federal Reserve is the federal supervisory agency for all depository institution holding companies, including savings and loan holding companies engaged in certain insurance activities. A depository institution holding company is considered to be a supervised insurance organization (SIO) if it is an insurance underwriting company or if over 25 percent of its consolidated assets are held by insurance underwriting subsidiaries. The Federal Reserve has typically supervised such companies on a consolidated basis, meaning that its supervision encompasses all legal entities within a holding company structure. However, given the materially different risks arising from insurance activities, as well as existing supervision and regulation by state insurance regulators, the Federal Reserve is seeking to further tailor its supervision in this area.

Under the proposed framework, the Federal Reserve would implement a risk-based approach establishing supervisory expectations, assigning supervisory resources, and conducting supervisory activities; the formalization of a supervisory rating system; and a description of how examiners would work with state insurance regulators to limit the burden associated with supervisory duplication. The proposed supervisory framework would result in supervisory activities and the application of supervisory guidance that look beyond the size of the institution and instead focus on the material risks that could pose a threat to the organization’s safety and soundness. The Federal Reserve would also leverage the work already done by state insurance regulators, such as using certain reports in connection with the assessment of SIOs. 

For SIOs, the proposed framework and the Federal Reserve’s attempt to minimize the burden associated with supervisory duplication should be viewed positively. As always, however, the devil will be in the details of the ultimate text of the regulation. 

Comments will be accepted for 60 days from the date of publication.

CFPB Identifies Consumer Reporting Companies the Public Can Hold Accountable

On January 27, the CFPB released its annual list of CRCs. Using the CFPB’s annual list, people can search for CRCs that provide specialized reporting by market, identify which CRCs provide information for free, exercise their right to see the information a CRC has on them, file a dispute if the information appears to be inaccurate, have the CRC conduct a reasonable investigation regarding the dispute, submit a complaint to the CFPB if they have a problem with a CRC, and file a lawsuit if a CRC is in violation of the Fair Credit Reporting Act.

“Americans have limited legal rights they can use to keep tabs on these surveillance companies and hold them accountable when they violate the law.” 
- CFPB Director Rohit Chopra

SEC Proposes Rules That Could Regulate DEFI, Extend to Aspects of Centralized Crypto Exchanges

On January 26, the SEC proposed rule changes that would greatly expand the scope of Regulation ATS, the regulatory regime that governs alternative trading systems (ATS). The proposed expansion to the definition of “exchange” would broaden the scope of the ATS regime from a centralized construct to one in which a communication protocol system would be viewed as an exchange even if the developer merely “makes it available.”

Read the client alert to learn more about the proposed rule, as well as our additional alert covering quick takeaways and next steps.

How the Proposed Amendments to Form PF Would Affect Private Fund Sponsors

On January 27, the SEC proposed amendments to the Form PF that would (i) introduce new “current reports” for (a) “large hedge fund advisers” with respect to “qualifying hedge funds” and (b) all advisers to private equity funds (without a size requirement), (ii) lower the threshold required to be a “large private equity fund adviser” and expand the annual reporting required by “large private equity fund advisers,” and (iii) make the reporting by “large liquidity fund advisers” consistent with the proposed reporting requirements for registered money market funds.

Read the client alert for an overview of these proposed amendments and their impact on private equity fund advisers.

SEC Filing Fee Exhibit Payment and Related Changes

Amendments adopted by the SEC have changed a variety of SEC rules, forms and schedules related to disclosure and payment of SEC filing fees. As summarized in an SEC fact sheet, the most visible changes for most filings will be (1) replacing the current fee table on the cover page and in the EDGAR submission header of most fee-bearing SEC filings with new fee table exhibits and (2) changes in fee payment methods.

Read the client alert for practical considerations and to view Goodwin’s sample fee tables. 

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