Finally, SROs may institute disciplinary proceedings against members that are heard before their own internal bodies, although these may ultimately be appealable to the Markets Regulator itself. Certain financial services authorities, such as the SEC, rely heavily on administrative proceedings, while others, like the Federal Reserve, use administrative proceedings less frequently. The Banking Regulators, the CFPB and the Markets Regulators may pursue civil violations of federal financial laws and regulations in the federal district courts, although the Banking Regulators generally elect to use administrative proceedings rather than court proceedings. State corporate laws and common law generally govern the duties of the directors of US corporations, including financial services firms. The largest penalties tend to be imposed in settlements in which the respondent knowingly violated the law and caused a pecuniary loss as a result. These proceedings may result in non-judicial findings of fault or wrongdoing. Administrative proceedings are presented before administrative law judges (ALJs), who may be employees of the particular financial services authority. Federal district courts in the US adjudicate violations of both civil and criminal federal law.
Criminal financial services violations are also adjudicated in the federal district courts. Which other bodies are responsible for criminal enforcement relating to compliance violations? The application requirements vary but will generally request information regarding the ownership of the applicant, certain prior criminal, civil or regulatory history, evidence of financial and capital adequacy, information relating to its proposed operations and compliance capabilities, among others. The principal areas of regulation for depository institutions and their holding companies include activities restrictions; safety and soundness requirements; capital and liquidity requirements; lending restrictions; fiduciary regulations; consumer protection laws and regulations; and affiliate transaction restrictions. In addition, the Banking Regulators conduct examinations that focus on compliance with particular legal and regulatory requirements, such as anti-money laundering laws or community investment and lending requirements. Each of the Banking Regulators regularly conducts on-site safety and soundness examinations to assess the financial and managerial soundness of the regulated institution.
The Markets Regulators examine regulated institutions for compliance with applicable laws and regulations both directly and indirectly through examinations by the SROs. The Banking Regulators are prudential regulators, supervising institutions within their jurisdiction to monitor their safety and soundness, as well as their compliance with federal banking laws and regulations. How is compliance examined and enforced in practice? Thus, the Banking Regulators expect supervised institutions to adopt an effective risk-management programme that manages compliance risk alongside the other risks present in an institution’s business. The Banking and Markets Regulators and the CFPB have civil enforcement powers and can pursue a variety of civil remedies. They also have enforcement powers to address legal and regulatory violations. What are the powers of national financial services authorities to discipline or punish infractions? How these authorities are exercised in practice varies by regulator. The Regulations require the Annual Statement to include a summary of any discretion which has been exercised in the award of directors’ remuneration.
These changes are relevant to quoted companies as defined in section 385 of the Act since they are required to publish directors’ remuneration reports. The primary statute applying to financial services firms regulated by the CFTC is the Commodity Exchange Act (CEA), which governs, among others, futures, options on futures and swaps, and certain persons that engage in activities with regard to those products. The primary statute applying to national banks is the National Bank Act, which sets out the parameters for the activities in which national banks may engage. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. With regard to the Markets Regulators, the registration regime depends on the particular activity engaged in by a firm. The board retains, however, the responsibility to evaluate and approve major decisions in the life of the firm.