This month The Trump administration, through acting CFPB Director Mick Mulvaney, announced sizeable restrictions to CFPB’s enforcement and day-to-day oversight of the financial industry’s fair lending practices. The move comes shortly after Mulvaney was installed as Acting Director following the departure of Richard Cordray. Speculation of the CFPB’s impending dismantlement under the Trump Administration has been swirling since the election and this is just one of the latest in a series of moves pertaining to the CFPB that lends some credence to that speculation. The decision will restrict the role of the Office of Fair Lending and Equal Opportunity – the fair lending enforcement arm of the CFPB – to one strictly focused on education and advocacy. The Office was also moved under the direct oversight of the Director’s Office, placing even more first-hand control with the Director. Additionally under Mulvaney’s direction, the bureau has dropped several payday loan cases and has announced plans to review current restrictions on payday lenders recently put in place by the CFPB under the Obama Administration. You may be more familiar with payday loans as a cash advance or paycheck loan. They are short term loans given at significantly higher interest rates. They are typically requested for immediate funds available in advance of a payroll check, with the principle and interest being paid shortly (typically after a paycheck is received).

What’s the CFPB’s role in fair lending enforcement?

Critics of the CFPB have long claimed that the bureau over-extends itself in terms of regulation and oversight. A prominent component of its oversight responsibilities focus on fair lending enforcement; ensuring that consumers are not discriminated against by lenders. This means, that you cannot be denied credit based on superficial terms such as race, sex, or religion. Have you ever heard the term “redlining”? It is a term used by the financial industry to describe lenders refusing credit based on residential demographics. Essentially, if you live in an area that the lender deems high-risk, they may reject your loan application. Of course this is completely illegal, but it hasn’t stopped lenders from trying. And this, along with other forms of discrimination, are exactly what the CFPB has been tasked with monitoring.

Looking for redlining and other lending discrimination

There are the few things that the CFPB looks at when a bank or lender is suspected of engaging in discriminating practices:

• Comparisons with other loan applications and originations in a minority area
• Where physical branches and offices are located
• Marketing scope and practices
• Current lending policies

Curbing predatory payday loans

In addition to ensuring that consumers have fair, equitable access to credit options, the CFPB has also played a considerable role in protecting consumers from being victimized by predatory loan practices. Most specifically, as they relate to payday loan or cash advance loan programs. The CFPB has aggressively gone after payday lenders in the past, including bringing lawsuits against those that the bureau alleged engaged in deceitful and predatory practices.

Why the changes to fair lending enforcement?

Since the bureau’s inception as part of Dodd-Frank, the Office of Fair Lending and Equal Opportunity has pursued lending discrimination, bringing several high-profile cases against lenders. Not only did it aggressively pursue discriminatory mortgage lenders, but other institutions as well, including automotive lenders. Herein lies the issue with most opponents of the bureau: Why, as measure created out of housing lending crisis and created to address oversight and enforcement for mortgage lending, intervening in auto lending enforcement? Well Dodd-Frank grants broad access for the CFPB, through the Office of Fair Lending and Equal Opportunity, to oversee and enforce fair lending practices. Under the Act, the Office of Fair Lending is tasked with:

• Providing fair lending enforcement under federal guidelines, including oversight for:
  • Equal Credit Opportunity Act (ECOA)
  • Home Mortgage Disclosure Act (HMDA)
• Coordinating fair lending enforcement efforts with federal and state regulators
• Working with private sector fair lending advocates

Essentially, this means that the CFPB has had a say (one with the authority to force compliance) in any form of consumer credit offering… but moves under the current administration are setting the stage for a drastically different CFPB.

What roll-backs at the CFPB mean for consumers

So how does the changing role of the CFPB affect you and other credit consumers? First, this does not mean the end of fair lending enforcement and consumer credit protection. The CFPB’s fair lending oversight responsibilities were concurrent with the regulation and oversight duties of other organizations. However, the relative autonomy in exercising its enforcement policies made the CFPB an aggressive and effective regulator in the financial lending industry. Critics of the announcement worry that the move will greatly reduce the CFPB’s efficiency in addressing lending discrimination.

There are also concerns raised over the pull-back by Mulvaney on the CFPB’s efforts to try payday lending discrimination cases. Under the Acting Director, the bureau has dropped several payday lending lawsuits, including one lawsuit file just a year ago, involving four different lending firms. Additionally, Mulvaney has announced plans for a review (and potential roll-back) on legislation the CFPB put in place this past October regarding payday lending regulation. The new regulations, which were set to take effect in January, would address lenders properly vetting loan applicants as well as set restrictions on certain lending practices. Unfortunately, this puts even more oneness on you as a credit consumer to be diligent when consider loans or other financing options. It’s now even more important to make sure that you completely understand all details of a potential loan, including repayment structure and fees and penalties. While there are other agencies tasked with reviewing and regulating fair lending enforcement, the recent announcement most likely means a decrease in efficiency and effectiveness in addressing discrimination cases as they will now be encompassing roles and responsibilities previously occupied by the CFPB.

Resources

Do you have questions about current loan programs in which you are enrolled or would like further information on how the CFPB’s decision will affect future credit applications, contact our team to discuss. You can also get more info on lending and investment information from our blog page.

Read that over a few times. Are those two words beginning to sound similar? That’s what the founders of My Big Coin, Inc. were hoping when they created their cryptocurrency investment offering. The Nevada-based company has been accused of defrauding investors hoping to cash-in on the recent investment trend. The Commodity Futures Trading Commission (CFTC) recently filed a lawsuit alleging the company used false and misleading information to steal from cryptocurrency investors. The My Big Coin founders preyed on the investor frenzy surrounding virtual currencies, like the popular Bitcoin – which has been yielding dizzyingly high returns – and widespread misunderstanding of the digital assets. By simply choosing a name that sounded vaguely familiar to “Bitcoin”, the company managed to solicit a total of $6 million from 28 investors. In what the CFTC essentially refers to as a Ponzi Scheme, My Big Coin, Inc. solicited investors and wooed them with false claims about values and usage of the fraudulent cryptocurrency. The fraudsters used investments from incoming investors to pay off initial investors, thereby sustaining the appearance of healthy investor returns. Other earnings were used to purchase lavish personal items.

New Players, Same Old Game

What this should teach us – aside from the alarming fact of how widely unregulated the cryptocurrency boom remains – is that cryptocurrency scams are just variations on a theme. In other words, they’re a new dog with the same old tricks. While cryptocurrency is a new and currently-evolving asset class, the investment scams cropping up around them are nothing more than the same ones fraudsters have been using for years – just adapted to suit the current climate. What makes these particular scams especially dangerous is the apparent lack of information investors have regarding cryptocurrency investing or even what cryptocurrency is for that matter. Fraudsters are able to so easily take advantage of investors because of the widespread insufficient understanding of the asset.

Don’t be an Ignorant Investor

We all know the phrase “ignorance is bliss”. However if you’re an investor, ignorance is sure to get you into hot water sooner than later. You need to be completely aware of not only in what you are investing, but also the how and why you are investing.

In the case of My Big Coin, investors allowed themselves to get caught up in the hype and fervor over the virtual currency boom. Realistically, little research (if any) was probably done on the company, with investors choosing to rely on fraudulent earnings reports showing big returns. The trouble is, it is not just novice investors falling victim to cryptocurrency scams. Fraudsters continue relying on the same old scamming methods, because they continue to work. While the blind hype around virtual currencies has certainly made it easier for scammers to dupe some investors, other fraudsters are getting more creative. By employing the basic tactics of “tried and true” investment fraud schemes, scammers create elaborate and complex scams that can dupe even experienced investors. The fact is, virtual currencies remain largely unregulated and existing measures are shaky, at best. Cryptocurrency as, an emerging investment class, continues to evolve at a rapid pace and regulators are constantly playing catch-up.

Blindspots in Oversight Leave Room for Cryptocurrency Scams

While there is an effort to ramp up enforcement and oversight for crypto-assets, regulators are warn that investor protection – like investment-loss recovery – is largely insufficient or non-existent. Unfortunately, these conditions are ripe for fraud. As you might imagine, severe lack of oversight and minimal enforcement of a new and widely misunderstood investment class probably sounds like the perfect opportunity for fraudsters, or what financial industry regulators call, ‘bad actors‘.

Until sufficient measures can be put in place, regulators are imploring investors to exercise caution and practice due diligence before committing to any investment opportunity. The Securities and Exchange Commission (SEC) is warning investors interested in Initial Coin Offerings (ICO) to be especially vigilant, as cryptocurrency scams involving this investment offering have been on the rise. In December, the SEC issued a public statement warning investors of the regulation realities. In it, SEC Chairman Jay Clayton states:

Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies.[2] If any person today tells you otherwise, be especially wary.

Currently, lawmakers and regulators are meeting to discuss building a stronger regulatory infrastructure for cryptocurrency investing. SEC Chairman Jay Clayton and CFTC Chairman J. Christopher Giancarlo appeared at a Senate hearing to discuss legislators’ concerns over crypto-assets.

Spotting ICO and Other Cryptocurrency Scams

Despite their apparent vulnerabilities, cryptocurrency investments remain popular. Even regulators have to concede some merit to the use-potential of crypto-assets. In that same December statement warning of industry risks, Clayton also recognized the effectiveness of initial coin offerings as fund raising method for entrepreneurs and startup businesses. The world of virtual currency industry is very much a modern Wild West; there’s promise and potential, but there are also dangers. Until the dust finally settles, regulators stress that investors need to remain vigilant against fraud. There are many resources available to educate investors interested in learning more about cryptocurrency. If you are considering a cryptocurrency investment offering, check out these resources:

• SEC
  • Ponzi Schemes Using Virtual Currencies
  • Sample Questions for Investors Considering a Crytpocurrency or ICO Investment Opportunity
• CFTC
  • Primer on Virtual Currencies
  • Virtual Currency Resource page
• FINRA
  • “Don’t Fall for Cryptocurrency-Related Stock Scams”

For even more information on cryptocurrency scams and news updates, check out our blog.

These are the buzz words among investors as we head into 2018. Building on the success and popularity of Bitcoin – which seems to be hitting new record highs every week – has caused a stir among investors, and it’s getting the attention of businesses. As investors look to find out how they can invest in the emerging cryptocurrency boom, startups and businesses are trying to find ways to capitalize. Initial Coin Offerings (ICOs) have started popping up as opportunities for investors to get involved with cryptocurrency investing at ground-level. However, financial regulators say investors need to be aware of fraud risks. The Securities and Exchange Commission (SEC) is warning investors to exercise caution when considering ICO investment opportunities or other forms of cryptocurrency investing. Due to the emerging nature of crypto-assets, state and federal regulators say it may be difficult to protect investors against fraud. A recent Reuters report states that adequate enforcement of this new industry does not exist and regulators may be unable to investment-losses due to fraud. Another added risk for investors is the recent revelation of widespread security vulnerabilities in nearly all consumer phones, laptops and computers. The recently discovered CPU flaws leave billions vulnerable to having sensitive financial information open to hackers. The two flaws, dubbed Meltdown and Spectre, affect nearly all digital devices at the CPU level. For investors in Bitcoin or other forms of cryptocurrencies, that means your cryptocurrency keys may be left vulnerable to a hack.

What You Can Do if You’re Intersted in Cryptocurrency Investing

Don’t let this news scare you. As with any emerging market or industry there is a learning curve. Regulators are taking action to address enforcement policies for ICO and other cryptocurrency investing opportunities. However, they recommend any investor interested to diligently research a company or business before deciding to invest.For more information on ICO-related investing, check out our blog. As for Meltdown and Spectre-related hacker risks, computer processor manufacturers are working to fix the flaws. In the meantime, here are some things you can do to protect yourself and your assets against hacker-risks.

Understanding Wrap Fees

Wrap fee programs sound like a great idea, and they are – for some. When considering a wrap fee program, you’ll first need to determine what you’ll actually be paying in wrap fees. Investment advisers and firms like to push sponsored wrap fee programs onto investors with the claim that bundled services make the investment process easier. They offer investors a one-stop-shop for managing investments and wrapped fees means easy payment. However, wrap fees may end up being more costly than a la carte services. Depending on your investment goals and activity a wrap fee program may not be the right choice. If you’re approached by your adviser with a wrap fee program, consider the services you currently use. Make sure you have an understanding of what fees and services are contained in the wrap fee program. All wrap fees offer slightly different services and fees, so understanding what’s in them is essential. Depending on your portfolio and needs, wrap fees may end up costing you more for services you don’t even need.

Here’s a tip:

Wrap fees are typically based of the value of assets. For accounts with frequent trading a wrap fee program can be a great option if it covers transaction fees. However, if you don’t have frequent trade activity and/or your transactions aren’t subject to a fee, a wrap fee program could actually end up costing you more. Of course, this only serves as a general rule-of-thumb. You will need to consider access to all the other services a wrap fee program offers. It is essential that you understand all the services and fees tied to your wrap fee program. Unfortunately, some advisory firms attempt to take advantage of investors by improperly disclosing or falsely advertising costs and services for wrap fee programs. If you want more info on wrap fees and typically wrap fee program services, check out this SEC Investor Bulletin.

Moderating Economy or Downturn Preparation?

While economists and financial experts seem to be in basic agreement about the projected number of rate hikes we should be expecting, there appears to be two schools of thought as to the Fed’s reasoning for hiking interest rates. A recent Reuters poll surveyed 103 economic experts. When asked what factors contributed to federal rate hikes, 40 percent said they believed it was to cap future inflation, while nearly a third believed the Fed is padding for a market downturn.

What Federal Rate Hikes Mean for You

Most experts agree on projections that the Fed will bump the current rate by 25 basis points, raising the current percentage from 1.25 to 1.50 percent. At the current pace, federal interest rate hikes wouldn’t hamper economic growth. There’s still room to grow and we’re still a comfortable distance from pre-recession levels. If you’re wondering how the expected rate hikes are going to be affecting your day-to-day, you probably won’t see too much change. As with any interest rate hike, savers benefit from increased higher interest rate returns,while spenders will find themselves paying higher rates on credit cards and loans.

What exactly is the CFPB?

You’ve probably heard of the Consumer Financial Protection Bureau, but you may not be entirely sure what it actually does. For those of you who aren’t aware, the CFPB is governmental oversight and regulating body that monitors the financial industry and protects consumers from predatory or unethical behavior. The bureau was formed as a measure under the Dodd-Frank Act, the legislation that provided much of the framework for our financial regulation post-recession. Its strict oversight and regulation has definitely come as a benefit to consumers, but businesses and banks have railed against it for its perceived overreach and autonomy. Along with regulatory oversight, the CFPB also provides a platform to empower consumers. In addition to providing educational resources to consumers, the bureau has made complaint filing much more accessible improving transparency between consumers and the banking industry.

Uncertain future the bureau

Many Republican lawmakers have expressed criticism over the CFPB. Additionally, it has long been the subject of attack from the Trump Administration. Many experts believe that, with Cordray’s departure the bureau will almost certainly be placed in the cross-hairs as the administration considers a major financial regulation review.

“Do no harm”

The phrasing Dudley used in asking Congress to preserve key regulations underscores the imperatives of the measures he his trying to preserve. Many of the core financial regulations in place today are a direct result of the 2008 crisis – which was itself a direct result of lack of sufficient regulation and oversight. The effects of the financial crisis were far-reaching and deep. We all experienced the negative effects and there are still people trying to recover what they’ve lost. It’s been a slow climb back to stable levels, but our economy is rebounding and investor activity is healthy; in fact, Wall Street indices have reached record highs over the last year. A return to normalcy could not have been achieved without the financial regulations put in place following the crash. While it seems that a review and potential overhaul of current measures is likely, eliminating the regulations that have helped us recover would not only be unwise, but could actually cause real harm to our economy. Fed experts also warn that financial deregulation can be a slippery slope, leading to massive unwinding of protective measures.

Key Financial Regulations

While Dudley did agree that some current regulation warrants adjustment, the key regulations maintaining a healthy financial industry must remain untouched. Among the key financial regulations, he listed standards upholding stronger capital, liquidity, and clearing must be kept in place.

Once you understand how tax laws apply to your capital losses, you will quickly see the benefits of reporting them. You will be able to form strategies that actually take advantage of stock losses ahead of time. Once an investment starts to head south, you’ll be able to make the right decisions to mitigate that loss.

Stock Loss Deductions

There are two types of reportable stock loss deductions:

• Short term losses
  • stocks held for less than one year
• Long term losses
  • Stocks held for one year or longer

While short and long term losses mirror capital gains in how they are categorized, the two function very differently. With capital gains, taxes are assessed based on how long you held on to a particular stock before selling. Short term gains are taxed at regular levels while long term gains are taxed at a much lower rate.

Advantages of Stock Loss Deductions

There are many ways you can benefit from reporting stock loss deductions on your tax return. You can use loss deductions to off-set taxes owed on gains. You can even carry over loss deductions into future years. If you have no capital gains taxes to report, losses can be used to deduct from your regular income. While you’re not going to recoup the total amount of a loss, consider deductions as a sort of consolation prize. Eating a stock loss is never fun, but at least deductions make it a little bit easier of a pill to swallow.

Reporting Deductions

As with all deductions, there are limits to reporting stock loss. The IRS requires investors to follow specific rules when it comes to reporting your losses. These apply differently depending on what type of loss you are reporting… Remember when we said there were two types of capital losses? Well there are actually two more. While short and long term losses define the loss itself in terms of how long it was held, losses are actually divided into two additional categories:

• Realized losses
  • When an investment is sold at a price lower than the initial purchase
• Unrealized losses
  • When an investment is held even after its value has fallen under that of initial purchase

Both types of losses must be reported on your tax return, but only realized losses can be applied as a deductions.

Deduction Limits

There are limits to what, how often, and when you can apply loss deductions towards. Most investors use stock loss deductions to offset taxes on short term gains. Since you are taxed on short term gains at a higher rate than long term gains, it makes sense to apply everything available to minimizing tax owed on those gains. Stock loss deductions can also be used to offset your regular income taxes. While The IRS limits this to $3000 in income tax deductions for a given tax year, if you have reported losses for that year greater than that amount, they can be used to offset income tax each year until the amount expires.

Questions About Stock Loss Deductions?

This just provides a basic overview of stock losses, their tax advantages and limits. There are more limits that apply depending on the type of investment, the manner in which it is sold, and to whom the investment is sold. If you have more questions about reporting stock losses as potential deductions, it’s best to speak with a financial adviser, accountant or tax attorney. A tax attorney specializing in stock investment-loss recovery can be a great resource available to you.

On Thursday, it was announced that the Securities and Exchange Commission (SEC), the nation’s top finance and securities regulator, had experienced a critical cyber security breach. The breach, which occurred in 2016, allowed hackers access to the SEC’s EDGAR system, a database which houses corporate filings and announcements for a multitude of Wall Street firms. The SEC hack has shaken investors and lawmakers as it poses serious questions regarding the SEC’s security measures and protocol. It is also possible that hackers may have profited on the insider info by trading on it. According to a Reuters report, the database contained sensitive, “market-moving information”. The announcement came as a shock to everyone and with concerns arising over the SEC’s ability to maintain and protect its security systems, you may be wondering what this means for your investments. For it’s part the SEC has taken steps to assure that the security breach has been addressed, however the SEC hack comes at a period of heightened concern over cyber security. This breach follows close on the heels of the massive Equifax scandal, in which hackers gained access to millions of customer records.

Security Protocol in Question

The SEC hack has raised questions in Washington among policymakers concerning what steps are being taken by regulators to prevent critical breaches like this one from occurring. SEC Chairman Jay Clayton will be on Capitol Hill on Tuesday, appearing before the Senate Banking Committee. The chairman is expected to come under fire from policymakers, who will demand a clear account of the exact nature and extent of the SEC hack. Ahead of this hearing, other financial and securities regulators have come forward with their cyber security measures.

Investor Resources

If you’d like to find out more about the SEC hack, read the full Reuters article here. For more regulatory news and investing tips, check out our blog.

This week, market analysts and investors saw Wall Street regaining upward traction. Dow and S&P indexes soared to record weekly gains, buoyed by a flurry of trading activity. According to a Reuters report, financial investing has been one of the major drivers, followed by industrial and tech.

Financials

• Bank of America, MorganStanley and Citigroup up 1 percent

Industrials

• Boeing and Caterpillar up 1 percent

This rebound comes ahead of the upcoming, two-day Federal Open Market Committee meeting at which Federal Reserve Chair Janet Yellen will speak. Investors will be looking for signals as to when new interest rate hikes might be announced. Investors are also watching for an announcement on the Fed’s plans to unpack much of its $4.2 billion portfolio of mortgage-backed securities and Treasuries The recent Wall Street rally also comes at a relatively calm period of uncertainty and market anxiety. Concern over global conflicts, as well as uncertainty over domestic policy has led many investors to hold back on riskier investments.

Calm Before the Storm?

Recent activity has reached record level. Dow and S&P recorded their best and second best weekly gains this year, respectively. However, there remains major uncertainty over future market outlooks. There is still uncertainty over how the Trump Administration will effect changes to current financial regulations as well as trade policy. Additionally, concern over foreign policy and rising geopolitical tensions has led to an apprehensive investment market. Until this rebound, financial investing, as well as other markets, had seen a slump after an initial, post-election boost.

Investor Resources

If you want to find out more about the recent, record-setting weekly gains, read the full Reuters article. For questions about protecting your investments or investment-loss recovery contact our team. Our expert legal team is here to ensure that you don’t fall victim to financial scams or investment fraud.

Review Your Insurance Settlement

Make sure you carefully review any insurance settlement you receive for damages. Before you accept it, make sure it makes sense. You should not be intimidated by your insurance provider, they are there for YOU. If something does not look right to you or you have a question, discuss it with your insurance company. Sometimes, it can be helpful to get a second opinion or another set of eyes to review your insurance settlement. An attorney specializing in insurance disputes or contract review can be a great resource to you when reviewing your claim. They can help you catch any issues and even provide some reinforcement if you end up disputing the claim amount. Hurricane Irma is projected to majorly impact Florida. It will likely result in extensive home and property damage as it passes through the state. If you file a claim and have questions about your settlement that the insurance companies won’t answer, contact an attorney for a review.

Common Buy-and-Sell Order Types

Market Order

Market orders are orders to buy or sell a stock at the best available price, i.e. market price. While market orders are typically executed immediately, it’s important to know that the price something last traded at is not necessarily the price you will get.

Limit Order

A limit order requires that a stock be bought or sold at a specific price or better.

• Buy limit orders can only be executed if the order is at limit price or lower
• Sell limit orders can only be executed if the order is at limit price or higher

It’s important to note that limit order may not always be executed. They depend on the market price reaching the set limit price.

Stop Order

Stop orders, also called stop-loss orders are orders to buy or sell when a stock reaches a specified value. When that value is reached, the order then acts as a regular market order.

• Buy stop orders are entered at prices above current market prices
• Sell stop orders are entered at prices below current market prices

Investor Resources

These represent only the three most common order types available. You can also combine order types to further suit your investing needs. To learn more about different order types and more on these common order types, read the full SEC bulletin. Check out our archives for even more news and tips!

Diversified portfolio or salad bar portfolio?

While novice investors are typically more prone to this mistake, even long-term investors can have this problem. Typically, this comes about due to lack of planning. You can’t just start building a diversified portfolio by grabbing anything that comes along. If you just start picking from all over the place, just piling on investments, that is the quickest route to making your portfolio a mess. In a recent article, Forbes refers to this as a “salad bar” portfolio.

What’s a salad bar portfolio?

You’ve probably seen (or maybe you’ve been) one of those the people going down the line at a salad bar, just piling on anything that looks good at the moment. By the time you leave the bar, your plate is loaded down with all sorts of bits and pieces. When its finally all heaped on the plate, then you realize you have way to much of everything and not enough of the stuff that matters. This is where the salad bar portfolio gets its name.

How to build a true diversified portfolio

In the article, Forbes offers up three tips for those seeking to build a true diversified portfolio:

• Make value-oriented, efficient investments
• Don’t invest based on short term gains
• Look at the big picture of a company before investing in it

We offer up an additional bit of advice if you’re investing with the help of a financial advisor. While a financial advisor can provide key insight and guidance in your investing, it’s important to remember that your are in charge of your investments. Some financial advisors or even broker-dealers are incentivized to encourage investments that will get them greater returns, not you. We encourage investors wanting to build a strong, diversified portfolio to set a a practical investment strategy and follow it.

Investor Resources

Read the full Forbes article to learn more about the risks of your diversified portfolio becoming a salad bar portfolio. If you believe you were misled in an investment by a financial advisor or broker-dealer, you may be entitled to investment-loss recovery.

However, did you know that part of Dodd-Frank requires banks to submit a financial doomsday plan outlining how they will dissolve in the event of a catastrophic collapse?

Essentially, they are “living wills” that show what and how assets would be liquidated in a bankruptcy. The big catch is, these plans cannot rely on taxpayer bailouts. Banks must submit practical, realistic plans that leave no room for optimism.

So who’s checking this financial doomsday plan?

Banks must submit their “wills” to The Federal Reserve and the Federal Deposit Insurance Corporation for their review and approval. These are rigid reviews that show no leniency towards a bank. And its not just a an informal thing that banks submit as a symbolic gesture. These plans play a significant role in a bank’s continued operational existence. Dodd-Frank allows regulators to take extensive measures to make sure that a bank’s dissolution plan is credible.

Which banks were required to submit a financial doomsday plan this year?

Most of the nations top big banks were required to submit plans, including:

• Bank of America
• Bank of New York Mellon
• Citigroup
• Goldman Sachs
• JP Morgan
• Morgan Stanley
• State Street Corp
• Wells Fargo

American Insurance Group and Prudential Financial were given one-year extensions to submit a workable plan.

Investor Resources

You can read each bank’s financial doomsday plan on the Fed’s website. For more legal and financial news, check out our blog. Contact our investment-loss recovery attorneys if you believe you have been the victim of stock fraud or broker misconduct.

What are bad actors?

FINRA defines a bad actor as one within the financial industry “who seeks to evade regulatory requirements and harm investors for their own personal gain”. Essentially, they’re con artists; fraudsters. I’m sure you’re familiar with that old adage about a few bad apples, right? Well, that’s exactly what Financial industry regulators have to say about bad actors. In his statement, FINRA President & CEO, Robert Cook spoke about the danger that bad actors pose to the overall stability in the industry as a whole. Bad actors have the capacity to ruin investor confidence in their broker-dealer and mar the reputation of the entire industry through their actions.

Spotting the bad apples

If you’re involved in the financial industry as an investor, it’s important to be able to spot bad actors. FINRA has comprehensive preventative measures in place to seed-out bad apples but every once in a while, some are bound to slip through the cracks. Here’s some things you should know before doing any business with a new broker-dealer.

License & Registration

No matter what security you’re investing in, make sure your broker-dealer is properly licensed and registered. This means they must be not only a licensed broker, but licensed to do the specific function they are offering to you. The broker must also registered with a licensed brokerage firm.

Account Monitoring

It is especially import to review your monthly account statements. Even if you are a passive investor who prefers to let your broker-dealer make investments as they see fit, you need to monitor your account activity and statements. Watch out for any unusual investments involving large sums, or irregular movement and contact your broker-dealer if you see anything unusual.

Aggressive Solicitation Practices

Aggressive or unwarranted solicitation of services or information should be an immediate red-flag. If you have been receiving repeated calls, emails or requests for correspondence from an individual claiming to be a broker-dealer associated with your account, you need to verify they’re identity.

Investor Resources

FINRA offers comprehensive investor support and resources. Click here if you want to learn more about filing a complaint or other services Contact our investment loss recovery attorneys if you believe you or a family member has been affected by bad actors.

Corporate tax cuts still on the way?

Optimism has since waned. As Congress has struggled to keep pace with a constantly in-flux administration with an ever-shifting stance, it has proved difficult for legislators to nail down details. Neither Congress nor the White House has yet announced any definitive plans for deregulation or tax cuts. In fact, it seems there won’t be any definitive plans for some time. According to a Reuters report, the White House says a detailed tax plan shouldn’t be expected until September. This leaves little time for Congress to pass a tax reform bill for 2017. Meanwhile, there seems to be some debate has to the scope of the intended tax cuts. The Trump Administration is calling for extreme cuts – 15 percent from the current 35 percent – whereas most Republicans have a more moderate 20 percent in mind. Even still, there’s further debate among Republicans has to how tax cuts will affect the U.S. deficit.

Blessing in disguise?

Maybe it’s a good thing there are no definitive tax cut plans. The White House and Capitol Hill should work closely together on an appropriate tax reform. Massive corporate tax cuts would take a drastic toll on the budget deficit. Depending on the scope of businesses and industries that a 15 percent tax rate would cover, it could increase the deficit $2.4-$4 trillion over the course of a decade.

Appeals Court Rejects ‘Travel Ban’

As stated in the majority ruling by the appeals court, the second travel ban was a thinly veiled attempt at pushing through the initial order. The Virginia-based appeals court blocked the order in a 10-3 ruling. Currently, the initial travel ban order blocked by a Hawaii judge is being heard by another appeals court in San Francisco. As the debate over the order heats up, it inches the case closer and closer to the Supreme Court. If this happens it could mean a monumental reconsideration of this country’s balance of governmental power. A Supreme Court case would necessitate a review of executive, judicial, and legislative reach. While the president’s powers to deny aliens is extensive, it is not absolute.

Immigration News

We will keep you updated as the order continues to move through the appeals process. Check our blog for latest updates on the travel ban and other immigration news.

Puerto Rico’s Bankruptcy Overview

For those of you who aren’t aware, Puerto Rico’s bankruptcy is the largest municipal bankruptcy filing in U.S. history. The island territory is suffering high poverty rates, massive unemployment and a breakdown of public health systems. Puerto Rico’s pension fund is currently nearly 100 percent under-funded, with $50 billion in pension debt. Additionally, it has $70 billion in bond debt.

Puerto Rico’s Retiree Committee

The Trustee’s appointment of a committee without formal court approval reflects a critical situation. Puerto Rico is almost completely unable to pay out benefits on its largest public pensions. This represents the largest pension hole for any U.S. state or territory in history.

What’s more, the federal board overseeing debt-restructuring has called for major cuts to pension funds to cure insolvency. In response, more than 90,000 retirees and pensioners have come together requesting representation during negotiations. While it seems that the Trustee concurs, it has reaffirmed that the Trustee reserves the Authority to select the members of the retiree committee. According to the Reuters report, the Trustee hopes to have a committee selected by June 16th.

Want to Know More?

If you’d like to know more about Puerto Rico’s bankruptcy and retiree committee-appointment, read the full Reuters article here. For more bankruptcy news and updates, visit our blog. If you have questions about filing for bankruptcy or bankruptcy procedures, contact us today.

More Than Previously Expected

Now it looks like it’s going to take a lot more than they thought. According to a recent Reuters report, the number of individuals affected by the accounts fraud scandal is far more than previously expected. In fact, it’s nearly double the initial figure. What was once nearly 2 million unauthorized account creations has now ballooned into 3.5 million. While the recent estimate is based on new case discoveries and hearings, Wells Fargo attorneys claim that it is largely “hypothetical” and “unverified”. Attorneys representing plaintiffs concur that it may be “over-inclusive”, but that the estimation provides a reasonable base for total compensation to plaintiffs.

Can a Settlement Be Reached?

Understandably, Wells Fargo has been keen to settle the matter. The big bank’s attorneys have already increased its initial settlement figures from $110 million to $142 million to account for more-than-expected numbers of affected accounts.

Preventing Future Accounts Fraud

The best method of preventing becoming a victim to accounts fraud is through awareness and education. Don’t be intimidated by big banks. You have the right to financial security. Make sure you regularly review all current accounts and monthly statements with any financial institution. You can follow our blog to stay up to date on legal tips, news and insights. Contact us with any legal questions or concerns regarding you financial security.

When Britain announced its decision to formally leave the European Union (EU), it raised a lot of uncertainty. While the decision caused global unsettling, probably the most anxious was the international investment banking community. Until now, Britain, specifically London, has been the undisputed epicenter of investment banking, next to Wall Street. In fact most top-tier U.S. investment banks housed their international headquarters in London. Now, as Britain enters into formal exit discussions, these banks are beginning to look elsewhere. Earlier this week, Bloomberg reported that JP Morgan Chase & Co. plans to move hundreds of London-based bankers to Dublin, Frankfurt and Belgium. Then, Reuters recently reported that five top U.S. investment banks had indicated a huge employee shift to Frankfurt. According to the report, JP Morgan, Morgan Stanley, Goldman Sachs, Citigroup, and Bank of America plan to move over 1000 employees to Frankfurt.

Why Investment Banks are Leaving London

While no one has made any sudden movements or signs of jumping ship, the decision to start moving small numbers of employees to outlying EU headquarters is troubling sign for London. Of course, any major decisions depend on the outcome of negotiations between Britain and the EU. However, Britain’s decision to leave the EU greatly hampered its future as a central hub for international investment banking. Investment banks need to be firmly connected to the EU’s central currency system and relaxed trade regulations for countries of the 28-member bloc. Britain has been a logical international headquarter for U.S. investment banks due it’s close ties to both the U.S. and Europe. However, it no longer seems like a feasible option.

London’s Future as a Financial Capital?

While a major shift by investment banks elsewhere is unsettling to the U.K. government it shouldn’t be seen as apocalyptic. Geographically, London remains globally-central and is still a major hub for trade and commerce. It may lose its position as the world’s financial capital, but international banking operations are not expected to cease completely.