Financial Services Enforcement Actions Tracker

Regulatory Outlook

As anticipated, the first quarter of the year has seen enhanced supervisory oversight, with modifications of existing and proposal of new laws and regulations. The Consumer Financial Protection Bureau (CFPB) is leading the initiative with a significant number of policy changes and enforcement actions that are aggressively being pushed back by the financial services industry—from disputing the regulators’ allegations to refusing to pay large fines or admit wrongdoing.

• February 25, 2022: After opening a broad inquiry in October 20211, and subsequently fining J.P. Morgan Securities in December 20212, the US Securities and Exchange Commission (SEC) continues to investigate how Wall Street banks keep track of employees’ digital communications by probing Goldman Sachs, in addition to others (e.g., Citigroup, HSBC).
• March 22, 2022: The CFPB issued policy on contractual “gag” clauses and fake review fraud aimed to prevent manipulating or suppressing consumer reviews, which follows the Federal Trade Commission’s (FTC) efforts to deter fake reviews and related fraud across the digital economy.
• March 23, 2022: With focus on consumer protection, federal agencies, including the Federal Reserve Board (FRB), the Office of the Comptroller of the Currency (OCC), and the CFPB, joined forces to support the Property Appraisal and Valuation Equity task force’s plan, aiming to identify and prevent algorithmic bias in home valuation.
• March 28, 2022:

• The CFPB Director Rohit Chopra shared a plan for reining in repeat offenders with a robust enforcement regime and tools against large banks and other financial firms described as corporate recidivists, which continue breaking the law, with only a few additional sanctions.
• The SEC increased its budget request in its annually published Congressional Budget Justification. The expansion of almost $240 million is driven largely by increase in enforcement activities.

Guidehouse anticipates more policy changes outside the normal “notice-and-comment” process, which will led to an increase in compliance costs, as well as targeting repeated industry offenders. With continued emphasis on consumer protection, regulators are expected to expand focus and include nonbank financial companies, which are considered to pose risk to consumers.

Federal-Level Enforcement Actions

The following enforcement actions are examples of some of the top federal enforcement actions for Q1 2022.

1. Bank Secrecy Act

   There were four actions cited as pertaining to the Bank Secrecy Act, totaling $160.4 million in monetary penalties and restitution. These actions were related to the banks’ failure to adopt and implement a Bank Secrecy Act/Anti-Money Laundering compliance program.

2. Governance Deficiencies

   There were four actions related to Governance Deficiencies, one of which totaled $9 million in monetary penalties and restitution. This action was related to a bank’s failure to comply with rules requiring firms to disclose potential conflicts of interest when issuing research reports.

3. Unfair, Deceptive or Abusive Acts or Practices (UDAAP)

   There were four actions related to UDAAP, totaling nearly $1.9 million in monetary penalties and restitution. Two of these actions specifically cited violations to the Fair Housing Act, which included the refusal to support an affordable housing development and denying housing based on race.

4. National Flood Insurance Program

   There were eight actions cited as pertaining to the National Flood Insurance Program, totaling nearly $300,000 in monetary penalties and restitution. One of the actions was in connection with a bank’s pattern or practice of violations of Regulation H: Membership of State Banking Institutions in the Federal Reserve System.

Methodology

Guidehouse’s Financial Services Enforcement Actions Tracker compiles publicly available data from both federal and state regulators regarding quarterly enforcement actions against financial institutions. First published in 2016, the Tracker showcases the types of activities that consumer finance-focused regulators are currently monitoring and helps the audience better address the trends and challenges in today’s regulatory environment.