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MoFo Reenforcement

The Enforcement Blog

Court Finds CFPB Case Against Payment Processor Lacking

Posted in CFPB, Enforcement Actions, UDAAP

On March 17, 2017 the United States District Court for the District of North Dakota granted the motion of Intercept Corporation and its senior executives to dismiss the complaint filed almost a year ago by the CFPB. Intercept is a payment processor that initiates ACH transactions to consumer accounts on behalf of its merchant-customers. This case is one of the few to go forward where the court is confronted with defining the parameters of the CFPB’s authority under the Dodd-Frank Consumer Financial Protection Act.

Read our client alert.

Is it Time to Streamline Financial Regulation?

Posted in Regulatory Developments

A March 13, 2017 presidential order requiring a comprehensive plan to reorganize the executive branch could be the first step toward streamlining the financial regulatory structure.

The Executive Order requires the Director of the Office of Management and Budget to propose a plan within a year to reorganize government functions and eliminate unnecessary agencies, agency components, and programs. The stated goal is to “improve the efficiency, effectiveness and accountability” federal agencies.  It appears that the plan is to address the Fed, the SEC, the CFTC, and other independent agencies even though those agencies are not typically subject to Executive Orders.

Read our client alert.

Financial Services Report – Spring 2017

Posted in Arbitration, CFPB, Credit Cards, Credit Reports, Electronic Payments, Enforcement Actions, Fair Lending, Foreclosure, Investigations, Military Issues, Mobile Payments, Mortgage, Payday Lending, Preemption, Privacy, Regulatory Developments, State Regulators, Student Lending

In like a lion, out like a lamb—it works for weather; does it work for new administrations? We’ll have to wait and see. We’ll have to wait and see about the length of CFPB Director Richard Cordray’s tenure and the fate of Dodd-Frank, as it appears the Trump administration is focusing on other priorities. So the focus shifts to the D.C. Circuit, which agreed to reconsider the ruling by the federal trial court that the CFPB’s structure is unconstitutional. Or not, since the circuit court specifically asked the parties to brief whether it can avoid the constitutional question altogether.

In the meantime, CFPB enforcement is at an all-time high—a five-fold increase in cases from January 1, 2017, as compared to the same period last year. Coincidence? You make the call.

You also can make the call on arbitration, privacy, TCPA, what the other federal agencies have been up to over the past few months, and the rest of the financial services news.

Until next time, enjoy the wind, snow, sleet, or sunshine!

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CFPB Initiates Third CARD Act Review

Posted in CFPB, Credit Cards

On March 10, 2017, the CFPB published a Request for Information (RFI) regarding the consumer credit card market. In accordance with Section 502(a) of the Credit Card Accountability Responsibility and Disclosure Act of 2009, the Bureau conducts a biennial review of the consumer credit card market by soliciting public comment and feedback.

The CFPB uses these RFIs to gather feedback from participants in the consumer credit card market, including consumers, credit card issuers, and consumer advocates. The 2017 RFI requests comment on specific topics required by the CARD Act, as well as other areas of interest to the CFPB. The CFPB also encourages commenters to address other issues related to the consumer credit card market they believe are worthy of the CFPB’s attention.

Read our client alert.

EVENT: Complimentary Teleconference: Current Practices and Issues for Foreign Broker-Dealers Under Rule 15a-6 in 2017

Posted in Events

In an increasingly globalized securities market, Rule 15a-6 remains the primary avenue for foreign broker-dealers to conduct business in the United States. This presentation will address the requirements for compliance by foreign broker-dealers and their U.S. affiliates.

Tuesday, April 28, 2017, 1:00 p.m. – 2:00 p.m. EDT
To register, e-mail CMG-events@mofo.com.

Topics Will Include:

  • Summary of Rule 15a-6 requirements;
  • Risks and responsibilities of acting as a chaperoning broker;
  • Practical issues in intermediating Rule 144A and other transactions;
  • Benefits of an intermediary agreement; and
  • Dealing with retail customers under Rule 15a-6.


  • Hillel Cohn
    Senior Of Counsel, Morrison & Foerster LLP
  • Francois Cooke
    Managing Director, ACA Compliance Group

CFPB Proposes Delayed Effective Date of Prepaid Accounts Rule, Releases Short-Form Disclosure Guide

Posted in CFPB, Credit Cards, Regulatory Developments

On March 9, the CFPB announced in a blog post a proposal to delay the effective date of the final rule on prepaid accounts (Final Rule) for six months to April 1, 2018. The Bureau also released a guide for preparing the short-form disclosure required under the Final Rule.

Read our client alert.

The Madden Saga Continues: On Remand, Madden Survives Summary Judgment and District Court Certifies Class

Posted in Credit Cards, State Regulators

On February 27, 2017, the U.S. District Court for the Southern District of New York in part denied a renewed motion by Midland Funding, LLC (“Midland”) to dispose of claims brought by Saliha Madden (“Madden”) under the Fair Debt Collection Practices Act and the New York General Business Law. The Order also certified two classes of plaintiffs, thereby permitting Madden’s claims to proceed as class actions.

Madden claims that Midland illegally charged Madden and other similarly situated New York debtors a usurious rate of interest on certain defaulted credit card obligations that Midland had purchased from a national bank. On May 22, 2015, the U.S. Court of Appeals for the Second Circuit reversed a June 2, 2014, order of the district court granting summary judgment in favor Midland and remanded the case. The Second Circuit held that Section 85 of the National Bank Act, 12 U.S.C. 85, which preempts state laws governing the interest a national bank may charge on a loan, does not apply after a national bank sells a loan to a non-bank. The U.S. Supreme Court denied Midland’s petition for writ of certiorari on June 27, 2016, leaving the district court to reconsider the litigation in light of the Second Circuit’s holding. In this alert, we briefly summarize the Order and examine certain open questions and potential next steps.

Read our client alert.

RESPA Two-Step: CFPB Shows Continued Expansive Interpretation of Section 8

Posted in CFPB, Enforcement Actions, Mortgage

On January 31, 2017, the Consumer Financial Protection Bureau announced a Consent Order with a mortgage lender and certain of its affiliates (“Lender”). The CFPB alleged in the Consent Order widespread violations of Section 8(a) of the Real Estate Settlement Procedures Act, stemming from a host of agreements and arrangements the Lender allegedly had entered into with settlement-side parties such as real estate brokers. In tandem with the Consent Order, the CFPB announced consent orders with each of the real estate brokerage firms identified in the Consent Order. The real estate orders represent repeat versions of the wrongdoing alleged against the Lender, and provide additional factual background on the alleged unlawful acts in the Consent Order.

The breadth of the subject matter of the consent orders, which in one round of settlements covered many common marketing-related arrangements between mortgage lenders and other settlement-side parties such as real estate agents and brokers, is unprecedented. Of course, the consent orders collide with marketing and customer acquisition strategies of mortgage lenders that appear to be on the rise in the increasingly competitive rising-rate environment. This alert summarizes significant points in the Consent Order (as informed by the real estate orders) and outlines possible takeaways for mortgage market participants.

Read our client alert.

EVENT: ALI CLE Webinar: SEC in 2017 – What’s Next? SEC Veterans Weigh In

Posted in Events

Thursday, March 9, 2017
12:30 p.m. – 2:00 p.m. EST

As the Trump Administration takes charge in 2017, the only thing that seems inevitable is that the regulatory and enforcement outlook will change. Initial indications point to a desire to relax or repeal certain regulations that may be regarded as burdensome to public companies. Also, proposed legislation would relax certain corporate governance and compensation-related measures that formed part of the Dodd-Frank Act. Proposed legislation also would address the types of cost-benefit analysis that would be required to support proposed regulation.

Don’t miss this chance to learn SEC regulations’ status and how they will likely change from experts who have been directly involved in rule-making and implementation of U.S. securities laws.

Topics to be discussed include:

  • Rules that were proposed but not adopted by the SEC as part of the Dodd-Frank Act rule-making mandate;
  • What to expect as far as corporate governance and executive compensation requirements;
  • Final rules adopted pursuant to the Dodd-Frank Act mandate relating to extractive minerals and specialized disclosures;
  • Future of the Disclosure Effectiveness initiative;
  • Likely status of the rules proposed by the SEC and not yet adopted;
  • Proposed changes affecting investment companies and their likely status; and
  • Anticipated enforcement areas of focus.


  • Andrew J. “Buddy” Donohue
    Former Chief of Staff, Director of Enforcement, and Director of Investment Management, SEC
  • Roberta Karmel
    Centennial Professor of Law, Brooklyn Law School, former SEC Commissioner
  • Robert Khuzami
    Partner, Kirkland & Ellis LLP, former Director of Enforcement, SEC
  • Troy Paredes
    Paredes Strategies LLC, former SEC Commissioner
  • Anna Pinedo
    Partner, Morrison & Foerster LLP

For more information, or to register, please click here.

Please contact cmg-events@mofo.com for a promotional code for discounted $99 tuition.

D.C. Circuit Grants En Banc Review on the Constitutionality of the CFPB Leadership Structure

Posted in CFPB

CFPB Director Richard Cordray has a little more job security this week than last week. On February 16, 2017, the U.S. Court of Appeals for the District of Columbia granted the CFPB’s request for an en banc review of its October 2016 decision finding the CFPB leadership structure unconstitutional. As detailed in our client alert: CFPB Hit by Major Setback In D.C. Circuit, the D.C. Circuit previously found that the single-director structure of the CFPB violated constitutional separation of powers principles. As a remedy, the D.C. Circuit had eliminated the director’s “for cause” tenure protection from the statute, which made the director fireable at will.

This grant of review vacates the October judgment and bolsters Director Cordray’s “for cause” tenure protection—at least for now. The rehearing is set to be heard on May 24, 2017. The D.C. Circuit has asked the parties to address the following three questions:

  1. Is the CFPB’s structure as a single-director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?
  2. Can the court appropriately avoid deciding the constitutional question given the panel’s ruling on the statutory issues in this case?
  3. If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled the case was an inferior officer rather than an employee, what is the appropriate disposition of this case?