MVA White Collar Defense, Investigations, and Regulatory Advice Blog

Following up on our most recent blog post on developments regarding the enforcement date for the CTA, on the afternoon of December 23, 2024, the Fifth Circuit issued its order staying the U.S. District Court for the Eastern District of Texas' nationwide injunction on the beneficial ownership reporting obligations under the CTA.

As a result, the reporting obligations under the CTA are now back in effect except to the extent enjoined for plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), with all entities existing prior to 2024 and all entities formed in 2024 being required to file. Recognizing that reporting companies may need additional time in light of the injunction previously in effect, FinCEN will require entities existing prior to 2024 and entities formed in September, 2024 who would have had to file during the period when the injunction was in effect to file their initial BOIR before January 13, 2025 (instead of before January 1, 2025 as originally required). Entities formed on or after December 3, 2024, which would have had to file within 90 days of formation have an additional 21 days to file (111 days in total in which to file).  See https://www.fincen.gov/boi for the full update.

We are continuing to monitor the situation, and will provide further updates when they become available.

As discussed in our prior blog post, on December 3, 2024, the U.S. District Court for the Eastern District of Texas (“District Court”) issued an order preliminarily enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide (the “preliminary injunction”).

Artificial Intelligence (“AI”) is everywhere you look right now. AI is a lot of things, but for most of the market it is simultaneously a buzzword for innovation and efficiency, and a bogeyman for fraud and privacy concerns. As such, AI is a technology that banking and markets regulators, like the Commodity Futures Trading Commission (“CFTC”) are watching closely. On December 5, 2024, the CFTC issued a staff advisory (the “Advisory”) regarding the use of AI in CFTC-regulated markets.

On December 3, the U.S. District Court for the Eastern District of Texas (“Court”) entered a sweeping order enjoining enforcement of the Corporate Transparency Act and the associated beneficial ownership information reporting rules (the “CTA”) nationwide. The immediate effect: notwithstanding the CTA’s stated reporting deadline of December 31, 2024, no entity is currently required to file with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) information about itself, its owners or the persons otherwise controlling the entity.

On October 21, 2024, the Office of the Comptroller of the Currency (OCC) finalized revisions to its Guidelines Establishing Standards for Recovery Planning by Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches at 12 CFR Part 30, Appendix E (Revised Guidelines). The Revised Guidelines continue the regulatory trend following the 2023 bank failures of lowering the threshold at which financial institutions become subject to requirements aimed at promoting their resiliency—in this case, from $250 billion to $100 billion in average consolidated assets (Covered Banks). This will result in Covered Banks in the $100 billion to under $250 billion range having to develop and annually review recovery plans for the first time since 2018. Moreover, all Covered Banks will be subject to new requirements to test their plans and incorporate non-financial risk, with standards that differ from those applicable to resolution plans under the Federal Deposit Insurance Corporation’s (FDIC) recently finalized rule for insured depository institutions (IDI Rule) and Section 165(d) of the Dodd-Frank Act (165(d) Plans). As a result, Covered Banks of all sizes will need to reexamine and update their recovery planning processes. These changes are effective as of January 1, 2025, and are subject to staggered compliance dates.

With the amount of commercial real estate loans scheduled for maturity over the next several years expected to increase significantly, there is accompanying heightened risk that some borrowers may be unable to replace their maturing debt with new debt under reasonable terms and prevailing market conditions (refinance risk).  On October 3, 2024, the Office of the Comptroller of the Currency (“OCC”) issued OCC Bulletin 2024-29, which provides guidance to banks in the management of credit risk associated with refinancing commercial loans.  The bulletin, which applies to all banks with commercial loan portfolios, outlines that refinance risk affects both individual loan transactions and loan portfolios and can be driven by both external and borrower-specific factors. The bulletin highlights the need for banks to have related risk management processes that are appropriate for their size, complexity, risk profile and loan types. 

On October 22, 2024, the Consumer Financial Protection Bureau (the “CFPB”) finalized its personal financial data rights rule (“The Final 1033 Rule” or the “Final Rule”) that would require data providers to make available to consumers and their authorized third parties certain covered data in the data provider’s control or possession concerning a covered consumer financial product or service. This Final Rule comes a year after the CFPB initially proposed the rule (the “Proposed Rule”) in October of 2023.

On October 2, 2024, the Securities and Exchange Commission (“SEC”) announced it had settled enforcement proceedings against Thrivent Investment Management, Inc. (“Thrivent”), a SEC dually-registered broker-dealer and investment adviser, stemming from Thrivent’s alleged failure to update a calculator tool utilized by its representatives to determine which shares in certain 529 College Savings Plans are recommended to its retail customers.

Welcome to “The Desk”, Moore & Van Allen's (MVA) updated Swaps and Derivatives newsletter. Our goal is simple, to provide you key updates and insights that you can quickly digest and easily share with your peers, boss, or anyone else that shares a passion for swaps and derivatives news. 

On Sunday, September 29, California Governor Gavin Newsom vetoed California Senate Bill 1047, which would have established novel safety regulations on large artificial intelligence (AI) models.  Known as the Safe and Secure Innovation for Frontier Artificial Intelligence Models Act, SB 1047 would have required developers of covered models, which are defined to include only large, high-cost and power-intensive AI models, to, among other things.