Welcome to the Spring 2021 issue of Greenberg Traurig’s Financial Services Insights Newsletter. This newsletter reviews certain significant cases and legal developments affecting the financial services industry.
SCOTUS Rules Dodd-Frank Does Not Protect Internal Whistleblowing
On Feb. 21, 2018, the U.S. Supreme Court held that the anti-retaliation provision of the Dodd-Frank Act (DFA) protects only employees who complain to the Securities and Exchange Commission (SEC)
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SCOTUS to Resolve Circuit Split Over Dodd-Frank Whistleblowers
On Monday, June 26, 2017, the U.S. Supreme Court agreed to review whether the Dodd-Frank Act (DFA) prohibits retaliation against internal whistleblowers or only covers individuals who report to the
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Ninth Circuit Widens Circuit Split on Whether Dodd-Frank Protects Internal Whistleblowing
On March 8, 2017, in Somers v. Digital Realty Trust Inc., No.15-cv-17352 (9th Cir., March 8, 2017), the Ninth Circuit Court of Appeals affirmed the district court’s denial of
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President Trump to Nominate CFTC Acting Head J. Christopher Giancarlo
President Trump has announced his intention to nominate Commodity Futures Trading Commission (CFTC) acting head J. Christopher Giancarlo as permanent chairman. This news is of high importance for the alternative
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U.S. Court of Appeals for the District of Columbia Circuit Declared CFPB’s Single-director Structure Unconstitutional
In a 110-page decision issued on Oct. 11, 2016, the United States Court of Appeals for the District of Columbia Circuit declared the Consumer Financial Protection Bureau’s (CFPB) single-director structure unconstitutional and vacated a $103 million fine against PHH. The Court found that the current structure allows the Commissioner to wield too much power that is unchecked by any other part of government. To remedy this concern, the Court severed the “for cause” provision from the statute, placing the agency under the direct supervision of the president. The Court also vacated the Order against PHH, finding that the CFPB’s interpretation of RESPA violated PHH’s due process rights in several respects. First, the Commissioner erred in disregarding long-standing guidance from the Department of Housing and Urban Development (HUD) recognizing that Section 8 of RESPA allows captive reinsurance arrangements so long as the amount paid by the mortgage insurer for the reinsurance does not exceed the reasonable market value of the reinsurance. The Court declared that Section 8 shall continue to have the meaning ascribed to it by HUD. Secondly, in calculating the penalty against PHH, the Commissioner had improperly included loans that had closed more than three years prior to the action. The Court rejected the CFPB argument that it was not subject to any statute of limitations, and ruled that the agency was subject to the three-year limitations period that has traditionally applied to agency actions to enforce RESPA.
As we wrote about previously, this case stems back to a June 2015 CFPB order in which CFPB Director Richard Cordray singlehandedly increased a $6 million fine levied by an administrative law judge against PHH for allegedly referring consumers to mortgage insurers in exchange for kickbacks in violation of the Real Estate Procedures Act (RESPA). The ALJ’s fine was based upon loans closed on or after July 21, 2008.. PHH appealed that ruling to the Director. Cordray issued a final order that required PHH to disgorge $109 million – all the reinsurance premiums it received on or after July 21, 2008.On appeal, PHH challenged Cordray’s authority to levy the additional fine and challenged the constitutionality of the CFPB itself.
SEC Scrutinizes Severance Agreements for Compliance With Dodd-Frank
Recent SEC Fines
On Aug. 16, 2016, the U.S. Securities and Exchange Commission (SEC) announced that it had issued its second fine in as many weeks concerning a company’s use
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Senate Banking Committee Approves Changes to Dodd-Frank on Party-Line Vote
On May 21, 2015, the Senate Banking Committee approved by a 12-10 vote a financial regulatory reform package developed by the Committee’s Chairman, Richard Shelby (R-AL) that includes the most
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CFTC Picking Up the Pace of Whistleblower Program
Both the SEC and the CFTC were authorized by the Dodd-Frank Act to reward certain persons for providing information that leads to an enforcement action. Prompted by such a “whistleblower’s” notification, the CFTC investigated and initiated a widely-reported civil enforcement action against a trader. Under the CFTC’s implementation of the whistleblower program, for information that leads to monetary sanctions in excess of $1 million, whistleblowers can be paid between 10% and 30% of the sanction.
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CFTC Continues to Exercise Expanded Enforcement Authority Granted Under Dodd-Frank
After enactment of the Dodd-Frank Wall Street Reform and Customer Protection Act of 2010 (“Dodd-Frank”), Commodity Futures Trading Commission (“CFTC”) expanded its enforcement authority outside the traditional realm of exchange-traded
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