California Department of Business Oversight
Volume 6, Number 11 – June 2019
DBO to Launch New, Improved Website
The Department of Business Oversight is pleased to announce that it plans to transition to a new, improved website starting June 17.
This website upgrade is designed to improve the user experience for our licensees, consumers and the general public. However, it may require all of our users to re-establish and update frequently-used links and bookmarked pages.
The DBO’s web team has worked hard to make sure this transition goes as smoothly as possible. But we know glitches and errors are unavoidable. If you experience any issues with the new website, please report to them as soon as possible to firstname.lastname@example.org. Additionally, we welcome any other feedback that you would like to share.
Sukyee Lok Promoted to Regional Deputy Commissioner for Banking
Sukyee Lok has been promoted to Regional Deputy Commissioner of Banking for the Los Angeles Region. She assumed her new position May 31.
Sukyee began her career in state service in 1987 as a Department of Corporations examiner assigned to credit unions and escrow companies. After the credit union program was added to the Department of Financial Institutions (DFI) in 1997, Sukyee was promoted to a Senior Financial Institutions Examiner in the banking program. She was promoted to Financial Institutions Supervisor in 2004, a position she held for five years before becoming a Financial Institutions Manager (Portfolio Manager) in 2009.
Sukyee holds a bachelor’s degree in accounting from California State University, Los Angeles, and is a Certified Public Accountant.
SEC Adopts New Investment Advice Rules
On June 5, the Securities and Exchange Commission (SEC) adopted a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers. The package brings the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access to a variety of investment services and products.
Specifically, these actions include a new Regulation Best Interest (Reg BI), the new Form CRS Relationship Summary, and two separate interpretations under the Investment Advisers Act of 1940.
Under Reg BI, broker-dealers will be required to act in the best interest of a retail customer when recommending any securities transaction or investment strategy involving securities. Reg BI will enhance the broker-dealer standard of conduct beyond existing suitability obligations and make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer when making recommendations.
The Form CRS Relationship Summary will require registered investment advisers and broker-dealers to provide retail investors with simple, easy-to-understand information about the nature of their relationship with their financial professional. The format of the relationship summary allows for comparability among the two different types of firms in a way that is distinct from other required disclosures. Form CRS will also include a link to a dedicated page on the SEC’s investor education website, Investor.gov, which offers educational information about broker-dealers and investment advisers, and other material.
Reg BI and Form CRS will become effective 60 days after they are published in the Federal Register and will include a transition period until June 30, 2020, to give firms sufficient time to come into compliance.
Interpretations under the Investment Advisers Act will become effective upon publication in the Federal Register.
SEC, NASAA & FINRA Issue Senior Safe Act Fact Sheet
In recognition of the one-year anniversary of the passage of The Senior Safe Act, the Securities and Exchange Commission, the North American Securities Administrators Association (NASAA), and the Financial Industry Regulatory Authority (FINRA) on May 23 issued a fact sheet to help raise awareness of the Act among broker-dealers, investment advisers, and transfer agents.
The Senior Safe Act Fact Sheet provides information on the immunity and training provisions of the Act, as well as additional resources from the SEC, NASAA, and FINRA.
The Senior Safe Act was included as Section 303 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed into law on May 24, 2018. The Act protects “covered financial institutions” – which include investment advisers, broker-dealers, and transfer agents – and their eligible employees, affiliated persons, and associated persons (“eligible employees”), from liability in any civil or administrative proceeding for reporting a case of potential exploitation of a senior citizen to a covered agency.
FinCEN Updates Guidance on Virtual Currencies
On May 9, the Financial Crimes Enforcement Network (FinCEN) issued updated guidance, Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies (CVC). The guidance responds to questions raised by financial institutions, law enforcement, and regulators about the regulatory treatment of multiple variations of businesses dealing in CVCs.
The same day, FinCEN also issued an Advisory on Illicit Activity Involving Convertible Virtual Currency to assist financial institutions in identifying and reporting suspicious activity related to criminal exploitation of CVCs for money laundering, sanctions evasion, and other illicit purposes. The advisory highlights prominent typologies, associated “red flags,” and information in suspicious activity reports that would be most valuable to law enforcement.
The guidance does not establish any new regulatory expectations but consolidates current FinCEN regulations, guidance and administrative rulings related to money transmission involving virtual currency. It also applies the same interpretive criteria to other common business models involving CVC. FinCEN’s rules define certain businesses or individuals involved with CVCs as money transmitters subject to the same registration, anti-money-laundering, recordkeeping, and reporting requirements as other money services businesses.
Commercial Bank Activity
Uniti Bank, Buena Park, to merge with and into United Business Bank, Walnut Creek
Acquisition of Control
Mohamed Ahmar to acquire control of Partners Bank of California
Change of Name
Redding Bank of Commerce to change its name to Merchants Bank of Commerce
Premium Finance Company Activity
New Premium Finance Company
Pantheon Reserve, Inc., The
1108 Willow Pass Ct, Concord
Credit Union Activity
Cedars-Sinai Federal Credit Union, West Hollywood, to merge with and into Credit Union of Southern California, Anaheim
Foreign (Other State) Bank Activity
Manufacturers and Traders Trust Company
10250 Constellation Boulevard, Los Angeles (Facility – Insured Bank)
Money Transmitter Activity
New Money Transmitter
LL Pay U.S., LLC
PingPong Global Solutions, Inc.
Visa Global Services, Inc.
Acquisition of Control
Fiserve, Inc., to acquire control of Integrated Payment Systems, Inc.
Hangzhou Alibaba Network Technology Co., Ltd., to acquire control of Alipay US, Inc.
New Omaha Holdings L.P., to acquire control of CheckFreePay Corporation
Paysafe Group Holdings Limited, to acquire control of Skrill USA, Inc.
TF MC Acquisition Corp., to acquire control of Trans-Fast Remittance, Inc.
MANUEL P. ALVAREZ
Commissioner of Business Oversight
The June 2019 Monthly Bulletin covers the month ended May 31, 2019. It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available without charge via e-mail. To subscribe, go to: https://dfpi.ca.gov/connect-with-the-dbo-via-email/.