State Attorneys General Zero in on Elder Abuse, Financial Exploitation

The 2018 National Association of Attorneys General (NAAG) Presidential Initiative, “Protecting America’s Seniors: Attorneys General United Against Elder Abuse,” has come to a close with a summit held April 17-18 in Manhattan, Kansas, capping off an eight-month campaign during which state AG offices have augmented and sharpened their tools for investigating exploitation of this vulnerable population.

The initiative, selected by current NAAG president  Derek Schmidt, Kansas Attorney General, has brought AGs from around the country together to build state expertise on this issue and to fight elder abuse, neglect and exploitation. It has included a focus on financial exploitation as part of a broader look at how financial services industry interacts with the elderly.

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Proposed TRID Title Insurance Clarification: Senator Warren Cries Wolf

Recently, I came across an article written by Senator Elizabeth Warren entitled “Don’t Make Bad Bill on Bank Deregulation Worse.”  In this article, the Senator warned against efforts by the House to add additional deregulation measures to the bill that was approved by the Senate (S-2155, “The Economic Growth, Regulatory Relief and Consumer Protection Act”), opining that such efforts, if successful, would make the Senate bill even more dangerous than it already was.

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New Jersey AG Attempts to Fill Perceived Void Left By CFPB Retrenchment

On March 27, 2018, the New Jersey Attorney General, Gurbir S. Grewal, announced the appointment of Paul R. Rodriguez to be the new Director of the New Jersey Division of Consumer Affairs.  Mr. Rodriguez, a New Jersey native, previously served as Acting Council for New York City Mayor, Bill de Blasio, and a member of his senior management team.  Before that, he was an associate at Simpson, Thatcher & Bartlett, LLP in New York City.  He is a New Jersey native and a Yale Law graduate.

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Want to Vent About Regulations Adopted By the CFPB?

The CFPB recently issued a formal invitation (a Request for Information [RFI] for you to do just that, as well as to comment about any of the new regulatory authorities given to the CFPB by the Dodd-Frank Act.  In its March 14 press release about the RFI, the CFPB indicates that the RFI’s purpose to assist the CFPB in considering whether it should amend any rules it has issued since its creation or issue rules under new rulemaking authority provided for by the Dodd-Frank Act and to provide an opportunity for the public to submit feedback and suggest ways to improve outcomes for both consumers and covered entities.

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California City to Explore Blockchain-Based Financing

The City of Berkeley, California will be the first U.S. city to explore blockchain-based financing to tackle social issues such as affordable housing.  Mayor Jesse Arreguin and Councilmember Ben Bartlett are collaborating with the UC Berkeley Blockchain Lab and San Francisco-based financial startup Neighborly for the Berkeley Blockchain Initiative (“BBI”) to develop a tokenized municipal bond.  According to Forbes, Berkeley had a similar idea twenty years ago with a local currency called “Berkeley Bucks.”  This time, Neighborly explains, “[t]he initiative will explore how to harness the power of blockchain and cryptocurrencies to democratize access to public finance and improve social outcomes.”


Read the full report on our sister site, the FinTech Update.

With States Stepping Up Enforcement, Mulvaney Offers CFPB’s Partnership and Deference

Consumer Financial Protection Bureau (“CFPB”) Director Mick Mulvaney spoke to the National Association of Attorneys General winter meeting in D.C. on February 28, addressing the agency’s priorities under his leadership. He emphasized the different role that the CFPB will be playing under the Trump Administration, focusing mostly on targeting clearly illegal acts rather than making new law or policy, and said that he will be relying more on the states to take the lead in enforcement. Several Democratic AGs visibly grimaced during his remarks, particularly when he described the differences between his priorities and those of his predecessor, former CFPB director Richard Cordray, who had served as the Democratic AG of Ohio prior to his CFBP tenure and who brought many staffers to the agency who had previously held career consumer protection positions at various state AG offices.

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Statement Released That Multiple Crypto Exchanges Warned by Hong Kong Securities Commission

On February 9, 2018, the Hong Kong Securities and Futures Commission (“SFC”) released a statement which, among other things, informs the marketplace that the SFC sent letters to seven Hong Kong cryptocurrency exchanges warning against listing instruments that qualify as “securities” under the Securities and Futures Ordinance (“SFO”) without a required license.[1]  Additionally, the SFC sent letters to seven crypto token issuers inquiring about compliance with the securities laws.

In response to the letters, most cryptocurrency exchanges and initial coin offering (“ICO”) crypto token issuers either confirmed compliance or immediately took remedial measures,  according to the SFC statement.

To read the full post, please visit our sister site, The FinTech Update.

Treasury Secretary Suggests Greener Pastures for Marijuana Banking

On Tuesday February 6, 2018, U.S. Treasury Secretary Steven Mnuchin, in a speech before the House Financial Services Committee, offered some insights into how the Treasury Department may respond the growing area of marijuana banking. As we reported in a January 5th client alert, the Justice Department rescinded Obama-era policies that provided guidance to federal prosecutors on marijuana enforcement in states where the distribution of marijuana is legal under state law. Those Obama-era policies guided prosecutors to commit scarce federal resources to those areas where the public harm is the greatest, such as selling marijuana to children, using violent crime in operating a marijuana business, transporting marijuana from those states where it is legal to those states where it is not, and distributing marijuana on federal land. The Justice Department’s rescission of the Obama-era policies not only created uncertainty as to whether marijuana businesses in states where it is legal may continue to operate unobstructed by federal law enforcement, but also called into question the continued validity of the marijuana banking guidance issued by the Financial Crimes Enforcement Network (FinCEN) in 2014 that gave banks some flexibility in providing account and payment services to the marijuana industry.

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More Enforcement Action Taken by the SEC on Crypto Sales

On January 30, 2018, dissatisfied crypto token purchasers filed a class action lawsuit against Paragon Coin, Inc. (“Paragon”) and founders Jessica VerSteeg and Egor Lavrov, alleging that the Paragon initial coin offering (“ICO”) violated the federal securities laws.[1]  This lawsuit follows those filed by plaintiffs against Centra, Tezos, ATBCoin, BitConnect, and Xunlei in connection with their ICOs in recent months.  One of the more high profile class action defendants is BitConnect, which is defending two class action lawsuits alleging that it sold unregistered securities and operated a Ponzi scheme.[2]  BitConnect allegedly led purchasers to believe that they would receive a 3,000% return on their investment over the course of a year.

Read the full report on our sister site, The FinTech Update.

SEC Taking Action Against Companies Hyping Blockchain-Related Trading

The U.S. Securities and Exchange Commission (“SEC”) is continuing to increase its scrutiny of companies that might be taking advantage of investor excitement for blockchain and cryptocurrency (ICO) deals to inflate their share prices and raise funds.  On January 8, 2018, the SEC suspended trading in the securities of Hong Kong-based UBI Blockchain Internet, Ltd. (“UBI Blockchain”) through at least January 22, 2018.  This action follows the SEC’s suspension of trading in the securities of The Crypto Company announced in December 2017 and three other blockchain-related companies in the summer of 2017. Read the full report on our sister site The FinTech Update.