CFPB Issues Interpretive Rule: Tech Firms and Digital Marketers Acting as Service Providers Are Subject to CFPA
On August 10, the CFPB issued an interpretive rule clarifying that tech firms and digital marketing providers are typically considered “service providers” subject to the CFPA when they are materially involved in the development of content strategy, the identification or selection of prospective customers, or the selection or placement of content to affect consumer engagement with respect to consumer financial products or services. Although the CFPA excludes from the term “service provider” persons offering or providing time or space for an advertisement for a consumer financial product or service through print, newspaper, or electronic media, this “time or space” exception would not apply to tech firms or digital marketers whose activities go beyond traditional advertising by using, for example, consumer purchase or adoption behavior, personal data, or behavioral analytics models to target individual or groups of consumers. The CFPB warned that service providers subject to the CFPA can be held liable by the CFPB, states and other consumer protection enforcers for violations of consumer financial protection law. Also, on the same day, these points were conveyed in prepared remarks by CFPB Director Rohit Chopra at the 2022 National Association of Attorneys General Presidential Summit.
FDIC Releases Summer 2022 Supervisory Insights
On August 3, the FDIC released its Summer 2022 issue of Supervisory Insights, a publication aimed at FDIC-supervised financial institutions, examiners, bankers and supervisors.
This latest issue discusses the performance of banks concentrated in commercial real estate (CRE) lending during the pandemic as well as examination observations about risk management practices in the CRE-lending space. In addition, this issue explores the applicable capital, investment and financial reporting requirements for banking organizations in connection with the issuance of, and investment in, subordinated debt for banking organizations. Readers will also find a summary of recently released regulations and other items of interest.
SEC Proposes Rules to Improve Clearing Agency Governance and to Mitigate Conflicts of Interest
On August 8, the SEC proposed new rules to help improve governance arrangements across all registered clearing agencies by reducing the likelihood that conflicts of interest may influence the board of directors or equivalent governing body of a registered clearing agency. The proposed rule would establish new governance requirements on board composition, independent directors, nominating committees and risk management committees. It would also require new policies and procedures regarding conflicts of interest, board obligations to oversee relationships with service providers for critical services, and a board obligation to consider stakeholder viewpoints. The SEC previously proposed, but did not adopt, rules regarding clearing agency governance in two separate releases between 2010 and 2011: proposed Regulation MC, proposed Rule 17Ad-25, and proposed Rule 17Ad-26. Given changes that the SEC has made to its regulatory framework for clearing agencies, the SEC is withdrawing these previously proposed rules. The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.
“I think these rules would help to build more transparent and reliable clearinghouses. This in turn would help ensure our markets are more resilient, protecting investors and building trust in our markets. I was pleased to support this proposal because, if adopted, it would enhance governance standards for all registered clearinghouses, particularly with regards to conflicts of interest.”
-SEC Chair Gary Gensler
U.S. Crypto Regulation and the Digital Commodities Consumer Protection Act
Goodwin partner Grant Fondo was recently interviewed on CoinDesk TV in regards to the Digital Commodities Consumer Protection Act that was introduced on Wednesday, August 3, 2022. The proposed legislation suggests that the Commodity Futures Trading Commission (CFTC) should control crypto spot markets, specifically bitcoin and ether, which the bill classifies as commodities.
Watch the video.
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