Corporate Governance

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On November 20, 2020, the Office of the Comptroller of the Currency (“OCC”) issued a proposed rule that would impose on large national banks and federal savings associations (collectively, “banks”) a requirement to provide “fair access” to the financial products and services those institutions offer. The proposal is intended to preclude the banks it covers…

On August 21, 2018, the Commodity Futures Trading Commission (“CFTC”) adopted rule amendments that modify the requirements for Chief Compliance Officers (“CCO”) of swap dealers (“SD”), major swap participants (“MSP”) and futures commission merchants (“FCM”).  SDs and FCMs should review these rules in detail in order to assess the changes they will have to make to their compliance program before the rule is effective. While the amendments do not disturb the CFTC’s substituted compliance determinations, financial institutions taking substituted compliance for Chief Compliance Officers will still need to review and implement changes to their procedures because the rule impacts the annual report these institutions are still required to file with the CFTC.

The amendments clarify and, in most cases, narrow the scope of a CCO’s obligations. For example, the amendments make clear that a CCO’s obligations under CFTC regulations are specific to the registrant’s business as a SD, MSP, or FCM. The amendments also add materiality qualifiers to certain of the obligations of a CCO. For example, 17 C.F.R. § 3.3(d)(2) currently requires that a CCO, in consultation with senior management, take reasonable steps to resolve “any conflicts of interest that may arise.” As amended, the rule will require that the CCO, in consultation with senior management, take reasonable steps to resolve “material conflicts of interest relating to the registrant’s business as a” SD, MSP or FCM. (emphasis added).

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Continue Reading CFTC Amends Requirements for Chief Compliance Officers

In the wake of the #MeToo movement and broader conversations about sexual harassment and wage discrimination, many financial institutions are wondering whether any of these issues are affecting their organizations and, if so, how to address them.  To assess this question, financial institutions are increasingly turning to internal cultural reviews. These reviews, in which investigators…

On August 3, 2017, the Board of Governors of the Federal Reserve System (“Federal Reserve”) released a proposal regarding its supervisory expectations for the boards of directors of bank holding companies, savings and loan holding companies, state member banks, U.S. branches and agencies of foreign banks, and non-bank systemically important financial institutions supervised by the Federal Reserve (the “Proposal”).

In recent years, industry groups have catalogued the many specific requirements that the federal banking agencies’ regulations and guidance impose on the directors of banking organizations to review and approve day-to-day matters.  The industry has called for the federal banking agencies to reevaluate their regulations and guidance so as to focus directors on their core responsibilities – i.e., broader strategic and oversight activities.  Federal Reserve Governor Jerome Powell acknowledged these issues in April 2017, stating that “[w]e need to ensure that directors are not distracted from conducting their key functions by an overly detailed checklists of supervisory process requirements.”

The Proposal appears intended to accomplish this goal by: (1) distinguishing the Federal Reserve’s expectations for the board’s responsibilities from its expectations for management’s responsibilities, and (2) reducing the number of instances where guidance requires the board to review and/or approve specific matters.

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Continue Reading Federal Reserve Issues Proposal on Supervisory Expectations for Boards of Directors