Monthly Bulletin – March 2020
Volume 7, Number 8
State Senate Confirms Manuel Alvarez as DBO Commissioner
The California State Senate has voted to confirm the appointment of Manuel P. Alvarez as Commissioner of the Department of Business Oversight.
The Senate vote on Feb. 24 followed a recommendation of approval by the Senate Rules Committee on Feb. 12. Governor Gavin Newsom announced the Commissioner’s appointment on March 28, 2019.
During his confirmation hearing before the Rules Committee, Commissioner Alvarez thanked Governor Newsom for his trust and support and also thanked his DBO colleagues, “the unsung heroes who work tirelessly every day on behalf of California consumers and our licensees.
“Through this team of dedicated professionals, DBO oversees the state’s financial services industry, from banks to credit unions to investment advisors and many other products in between. Our work helps to insure that Californians can safely send money to people and causes they love, access capital to meet short-term needs and long-term dreams, grow their money in safe investment vehicles and engage in numerous other financial activities.
Commissioner Alvarez noted that over the past decade, “California companies have led the country, perhaps even the world in financial services innovation. From mobile payments and online loans to cryptocurrencies and investment robo-advisors, California companies have blazed new business models, new customer experiences and ultimately a new status quo.
“These changes,” he said, “hold both promise and peril and it is my goal as Commissioner of this department to strike a sensible balance between consumer protections, which preserve the integrity of our state’s financial ecosystem, and responsible technological innovation in financial services, which may increase access to quality and affordable financial products.”
Nicole Hisatomi Appointed Deputy Commissioner of Legislation
Nicole Hisatomi has joined the DBO as the department’s new deputy commissioner of legislation. She was appointed by Governor Newsom on Feb. 21.
Ms. Hisatomi, of Sacramento, has been legislative director for Assemblymember Mark Stone (D-Santa Cruz) since 2017 after serving as a legislative aide and an Assembly fellow from 2014 to 2017.
Ms. Hisatomi is a member of the Japanese American Citizens League, Florin, and the University of California Irvine Alumni Association. She earned a Bachelor of Arts degree in political science/public health policy from UC Irvine.
Gov. Newsom Declares Coronavirus State of Emergency
Governor Newsom on March 4 declared a state of emergency to help the state prepare for the broader spread of the novel coronavirus (COVID-19).
“The State of California is deploying every level of government to help identify cases and slow the spread of this coronavirus,” the Governor said. “This emergency proclamation will help the state further prepare our communities and our health care system in the event it spreads more broadly.”
The Centers for Disease Control and Prevention (CDC) recommends everyday preventive actions to help prevent the spread of COVID-19, including:
- Avoid close contact with people who are sick.
- Avoid touching your eyes, nose, and mouth.
- Stay home when you are sick.
- Cover your cough or sneeze with a tissue, then throw the tissue in the trash.
- Clean and disinfect frequently touched objects and surfaces using a regular household cleaning spray or wipe.
- Follow CDC’s recommendations for using a facemask.
- CDC does not recommend that people who are well wear a facemask to protect themselves from respiratory diseases, including COVID-19.
- Facemasks should be used by people who show symptoms of COVID-19 to help prevent the spread of the disease to others.
- Wash your hands often with soap and water for at least 20 seconds, especially after going to the bathroom, before eating, and after blowing your nose, coughing, or sneezing.
- If soap and water are not readily available, use an alcohol-based hand sanitizer with at least 60 percent alcohol.
For information about handwashing, see CDC’s Handwashing website.
For the latest on the state’s COVID-19 preparedness and response, visit the California Department of Public Health.
NASAA Reminds Investors to Beware of Con Artists Looking to Profit from Fear and Uncertainty
In light of ongoing developments related to the current coronavirus (COVID-19) outbreak, and its impact on financial markets, the DBO and other state and provincial securities regulators are reminding investors to beware of con artists seeking to capitalize on fear and uncertainty.
To help investors identify common signs of possible investment fraud, the North American Securities Administrators Association (NASAA) has provided three questions to ask before making a new investment:
- Is the investment being offered with a guaranteed high return with little or no risk? All investments carry risk of losing some or all of your money. No one can guarantee an investment return.
- Is there a sense of urgency or limited availability surrounding the investment? If the offer is legitimate, it will be there later. If someone offers you a “can’t miss” investment opportunity and puts you on the spot, don’t be afraid to walk away.
- Is the person offering the investment, and the investment itself, properly licensed or registered? For the same reasons you wouldn’t go to an unlicensed doctor or dentist, you should avoid unregistered investment salespeople and their products.
Critical U.S. Census Count Approaching on April 1
Every 10 years, people across the United States fill out census questionnaires, helping to ensure accurate population counts and determine national representation through the number of congressional seats and Electoral College votes allotted to each state. The Census also determines each state’s federal funding for important services that help support families and local governments. In the upcoming census, California risks losing a Congressional seat if accurate counts are not reported.
Households will soon receive a postcard letting them know it’s time to go online and fill out their questionnaire. A census survey may also be completed over the phone. As a third option, a paper form will be mailed to households that have not yet completed a questionnaire. When completing your census form, be sure you include every person living in your household, family or not, and children of all ages. The information you provide is private, secure, and critically important.
To learn more about the 2020 Census in California and why it matters, visit https://californiacensus.org/
Annual Reports Due March 15 for Several DBO programs
Annual reports for licensees engaged in business under the California Financing Law (CFL), the Property Assessed Clean Energy (PACE) financing program, and the Responsible Small Dollar Loan (RSDL) pilot program must be submitted to the Department of Business Oversight no later than March 15, as required under Financial Code section 22159(a).
Licensees with questions about these CFL reports for calendar year 2019 should call (213) 576-7690 or send an email to CFL.Inquiries@dbo.ca.gov
All California Deferred Deposit Transaction Law (CDDTL) licensees also must submit a 2019 Annual Report and Industry Survey to the DBO by March 15
If you have questions, or need clarification on the instructions, please email RespondToCDDTL@dbo.ca.gov.
Finally, pursuant to Financial Code section 28146(a) of the Student Loan Servicing Act, student loan servicers are required to file an annual report with the Commissioner of Business Oversight on or before March 15.
Licensees with questions about the SLS report should send an email to firstname.lastname@example.org.
BDIA Online Examination Commences April 1
The Broker-Dealer/Investment Adviser (BDIA) Division is continuing an annual online examination for certain registered investment advisers in accordance with the DBO’s authority under California Corporations Code section 25241, subdivision (c). This mandatory examination is for investment advisers registered with the DBO who have their principal place of business in another state.
The online examination this year is scheduled to commence on April 1. If selected, advisory firms will be notified on April 1 and required to complete and submit the online examination by May 15. The Division has structured the exam to be conducted on this population on a four-year cycle. However, an investment adviser may be selected for a future examination at any time.
To deliver the online examination, as well as any follow-up communication, BDIA will use the investment adviser email provided on the current Form ADV. The business email address must be dedicated to receiving DBO communications and monitored by the executive staff of your firm to ensure prompt attention to communications from the DBO.
For questions or inquiries, please email the BDIA Division at CADBOExams@dbo.ca.gov.
Invitation for Comments on Proposed Public Banking Law Regulations
The DBO is seeking comment on proposed regulations to implement the new Public Banking law. Governor Newsom signed AB 857 (Chapter 442, Statutes of 2019) last year to establish a process for a local agency to apply for a public bank charter from the California Department of Business Oversight.
To expedite the rulemaking process, the Commissioner intends to issue regulations in phases. The first phase will focus on general definitions and application requirements. This will enable the Commissioner to provide guidance on those areas most immediately relevant to stakeholders and enable implementation of the new law as quickly as possible.
Subsequent rulemaking phases will address areas specific to licensees, including examination and reporting requirements and collateralization of local agency deposits.
Proposed Money Transmission Agent of Payee Regulations
The DBO is seeking comment on proposed regulations to clarify the scope of the agent of payee exemption under the Money Transmission Act (MTA).
The MTA exempts transactions in which an agent is contractually appointed by a payee and a payor’s delivery of funds to the agent is deemed by contract to satisfy the payor’s obligation to the payee for goods or services provided by the payee to the payor (“agent of payee exemption”).
The agent of payee exemption was added to the MTA in recognition of the evolving nature of online payments. The exemption is self-executing, which means an entity does not need the DBO’s prior authorization to rely on the exemption. Due to the self-executing nature, regulations are needed to clarify the application of the exemption to avoid uncertainty and confusion.
The notice, text, and initial statement of reasons for this proposed rulemaking action may be accessed on Laws and Regulations – Money Transmitters page. Comments may be submitted to email@example.com by the deadline of April 20.
CSBS Launches Nationwide Technology Platform to Examine Fintechs and Other Nonbanks
The Conference of State Bank Supervisors (CSBS) has announced the national rollout of the State Examination System (SES), the first nationwide platform to bring state regulators and companies into the same technology space for supervision. The SES is expected to foster greater transparency and collaboration, enable state regulators to enhance supervisory oversight of nonbanks, and make the process more efficient for regulators and companies alike.
The system is developed and operated by the State Regulatory Registry (SRR), a CSBS subsidiary that also operates the Nationwide Multistate Licensing System (NMLS).
The SES is designed to:
- Support networked supervision among state regulators
- Standardize workflow, business rules and technology across states
- Facilitate secure collaboration between licensees and their regulators
- Help examiners focus more attention on higher-risk cases
The SES is part of the overall CSBS Vision 2020 to use technology to promote multistate harmonization, strengthen state supervision and protect consumers.
Commercial Bank Activity
Grand Mountain Bank, FSB, Granby, Colorado, to merge with and into United Business Bank, Walnut Creek
Premium Finance Company Activity
New Premium Finance Company
Chasewater Premium Finance Inc.
600 West Broadway, San Diego
CJS Premium Solutions, Inc.
1249 Park Avenue, San Jose
ForeverCar Consumer Credit of California, Inc.
915 L Street, Sacramento
Credit Union Activity
City of Ukiah Employees Credit Union, Ukiah, to merge with and into Redwood Credit Union, Santa Rosa
S.F. Bay Area Educators Credit Union, San Francisco, to merge with and into San Francisco Federal Credit Union, San Francisco
Kern Schools Federal Credit Union to convert to state charter under the name Valley Strong Credit Union
Money Transmitter Activity
New Money Transmitter
Currency Cloud Inc.
Acquisition of Control
Christopher Sherrod, to acquire control of VendEngine, Inc.
MANUEL P. ALVAREZ • Commissioner of Business Oversight
The March 2020 Monthly Bulletin covers the month ended February 29, 2020.
It is issued pursuant to Financial Code section 376.
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