Monthly Bulletin – December 2022
Volume 10, Number 5
New State Laws That May Affect DFPI Licensees
Highlights of 2022 Chaptered Legislation, a compendium of new state laws that may affect or be of interest to DFPI licensees, is now available on the Department’s website. The collection includes a brief description and a link to the text of each bill.
Significant new laws this year include SB 1415 (Limón and Bradford) requiring banks and credit unions to report to the DFPI the revenue earned from overdraft fees and nonsufficient funds fees collected, and AB 2001 (Grayson) that allows some DFPI licensees to permit employees to telework under certain conditions.
DFPI Takes Actions On Crypto Asset Accounts and Businesses
On Dec. 5, the DFPI announced an investigation into crypto-related lending company CONST LLC (doing business as “MyConstant”), which is not licensed to operate in California by the DFPI.
On Nov. 23, the DFPI announced the suspension of SALT Lending LLC’s California Financing Law license for 30 days pending the Department’s investigation into SALT’s recent announcement to limit its platform activity including pausing client withdrawals.
On Nov. 22, the DFPI issued a desist and refrain order against NovaTech alleging that NovaTech sold unqualified securities and misrepresented itself as a registered hedge fund, a registered investment adviser, and a registered broker to convince investors that it was a legitimate investment opportunity. This action is in furtherance of the DFPI crackdown on crypto High Yield Investment Programs (HYIPs).
On Nov. 22, the DFPI issued a desist and refrain order against Fundsz alleging that Fundsz sold unqualified securities while assuring investors that its proprietary algorithm would trade crypto assets and generate steady returns for investors averaging about 3% per week. This action is in furtherance of the DFPI crackdown on crypto High Yield Investment Programs (HYIPs).
On Nov. 18, the DFPI announced the suspension of BlockFi Lending LLC’s California Financing Law lender license for 30 days pending the Department’s investigation into BlockFi’s recent announcement to limit its platform activity including pausing client withdrawals.
Debt Collection Licensing: Application Update
With the passage of AB 156, starting January 1, 2023, the DFPI will be able to approve applications under the Debt Collection Licensing Act (DCLA), with the condition that background checks will be performed at a later date. Any debt collector that submits an application before January 1, 2023, will be able to operate pending the approval or denial of the application.
The new law also extends the period from 60 to 90 days for individuals to provide fingerprints once the DFPI requests them. The DFPI will make further announcements in coming weeks regarding conditional approvals and at least 30 days prior to any changes to existing processes.
The DFPI will provide to DCLA applicants written notification through the Nationwide Multi-state Licensing System (NMLS) 90 days prior to fingerprinting being due. Unfortunately, with the delay in the application process there is still a backlog of application so there may still be delays in final approvals.
For more information, the new Debt Collection Licensee Voicemail phone number is (916) 576-8623.
Some Escrow Reports Due December 14
Escrow agents are required to submit to the Commissioner an annual report prepared by an independent certified public accountant or an independent public accountant (Financial Code section 17406) within 105 days after the close of the escrow agent’s fiscal year. The annual report includes audited financial statements and required supplemental information.
If your fiscal year ended on Aug. 31, 2022, your annual report is due Dec. 14, 2022. Please have your CPA email your report to ESCAnnualReportFiling@dfpi.ca.gov by the deadline using a secured, encrypted delivery system. The use of a secured dropbox is also acceptable. If your CPA is unable to submit the annual report electronically, it can be mailed to Sultanna Wan, Senior Financial Institutions Examiner, Escrow Law, Department of Financial Protection and Innovation, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.
Penalties for failure to file the annual report by the due date or to include required information are $100 per day for the first five days a report is late and $500 per day thereafter (Financial Code section 17408). Failure to file a report or to include any required information may also result in the suspension or revocation of an escrow agent’s license or a prompt an immediate examination (Financial Code section 17602.5).
For questions about the annual reports, call Sultanna Wan at (213) 248-7161.
NMLS License Renewal Available
The Conference of State Bank Supervisors (CSBS) encourages individuals and businesses that provide mortgage, money transmission, debt collection and consumer financial services to renew their annual licenses in the Nationwide Multistate Licensing System & Registry (NMLS).
Information on NMLS renewal is available on the Annual Renewal page of the NMLS Resource Center (www.nmls.org). To find specific guidance under the California Financing Law and other laws administered by the DFPI, begin by selecting “California” on the State Licensing page and follow the links to the transition checklists for the Financing Law.
Banks Must Submit Lists of Offices by December 31
Pursuant to Financial Code Section 1077, all commercial banks, industrial banks and trust companies are required to file a list of all offices currently maintained and operated by the bank. The report shall designate the type and complete address of each such office. Please note this requirement does not apply to other licensee types, such as foreign banking organizations, credit unions, money transmitters, etc.
For the purposes of section 1077, please provide the DFPI the following information on or before Dec. 31, 2021:
- Name of bank
- Popular name of branch offices and facilities
- Office type (include the head office, branch and facility locations; do not include free-standing ATMs)
- Street address, including city, state, country and ZIP code.
Responses may be emailed to Licensing@dfpi.ca.gov or sent by regular mail to Department of Financial Protection and Innovation, One Sansome Street, Suite 600, San Francisco, CA 94104 Attn: Licensing Section.
For questions, please contact Patrick Carroll at Patrick.Carroll@dfpi.ca.gov or (415) 263-8559.
Investment Adviser Representative Rulemaking Comments Due Jan. 16
The DFPI proposes to adopt a new regulation under the Corporate Securities Law of 1968. Paralleling the Model Rule of the North American Securities Administrators Association (NASAA), the Department is proposing a requirement that Investment Adviser Representatives (“IARs”) complete twelve total hours of continuing education annually, with six hours focused on Products and Practice and six hours focused on Ethics and Professional Responsibility.
The Notice of Proposed Rulemaking was published in the California Register on Dec. 2. The 45-day public comment period begins on Dec. 2 and ends on Monday, Jan. 16, 2023.
The Notice of Proposed Rulemaking, Text of Proposed Regulations, and Initial Statement of Reasons are posted on the Department’s website and available at https://dfpi.ca.gov/regulations-rulemaking-investment-and-financial-services-laws/law-and-regulations-corporate-securities-law/.
CSBS Community Bank Sentiment Index Survey
The DFPI encourages all banks to participate in the current Conference of State Bank Supervisors (CSBS) Community Bank Sentiment Index (CBSI) survey, which is open until December 31.
The CBSI survey captures what community bankers nationwide think about the future and is issued on a quarterly basis. The third quarter 2022 CBSI rebounded seven points from its all-time low of 84 experienced in the previous quarter, with an increase in all seven components. At 91 points, however, community banker sentiment is still relatively negative. This quarter’s survey will demonstrate whether that sentiment has changed. Results will be released in early January.
For more information about the CBSI, visit the website: The Community Bank Sentiment Index (CBSI) | CSBS.
REMINDER: Banks and Credit Unions to Report Fee Income from NSF and Overdraft Charges
SB 1415 was signed into law by Governor Newsom. It requires state-chartered banks and credit unions to notify the Department of Financial Protection and Innovation (DFPI) annually of the revenue they received from fees on nonsufficient funds and overdraft charges during the calendar year. These reports are due by March 1 so the DFPI can publish the information on its website by March 31. DFPI is currently developing a data collection and reporting process and anticipates notifying state-chartered banks and credit unions by yearend. Please refer to the FAQs or contact Derek Nelson at firstname.lastname@example.org (banks) or Kim-Phuong Hoang at email@example.com (credit unions) for more information.
DFPI Student Loan Webinars
On Dec. 21, DFPI’s Student Loan Servicing Ombudsperson, Celina Damian, will host a webinar regarding recently announced student loan updates including the student loan repayments pause extension, Federal Student Debt Relief, Public Service Loan Forgiveness, Fresh Start program, and more. Registration is available online at https://dfpi.ca.gov/backontrack/.
The U.S. Department of Education announced on Nov. 22 an extension of the pause on student loan repayment, interest, and collections. Payments will resume 60 days after the Department is permitted to implement the program or pending litigation is resolved, which will give the Supreme Court an opportunity to resolve the case during its current term. For more information, visit StudentAid.gov.
For videos of past student loan workshops, visit the DFPI “Californians with Student Loans” playlist set up on our YouTube Channel: https://www.youtube.com/playlist?list=PL9JLpvE-qjAYszf6F2mQdF1LSz-YP3RPi.
Also posted is the 2021 Annual Report for Nonprofit Entities Providing Zero-Interest Loans. Senate Bill 896 was enacted in 2015 to encourage nonprofit organizations (exempt organizations) to facilitate zero-interest, low-cost loans. In part, the small dollar loans are intended to allow consumers to establish and build credit histories or improve their credit scores.
DFPI Seeks Input for Website Renovation
The DFPI is working to improve our public-facing website and welcomes any feedback our readers and stakeholders can offer based on your user experience.
Completing the DFPI Website Improvement Survey helps us enact impactful changes that will support our mission of protecting California consumers and enhancing their awareness of potential marketplace risks and fraud. Thank you for participating.
Acquisition of Control
Strategic Value Investors, LP (the “Fund”); Strategic Value Bank Partners, LLC; Strategic Value Private Investors, LP; Strategic Value Private Partners, LLC; and Messrs. Benjamin Mackovak and Martin Adams, to acquire control of Community Bank of the Bay
Purchase of Partial Business Unit
First Northern Bank of Dixon to acquire the banking business of three branch offices of Columbia State Bank
Change of Name
Friendly Hills Bank, to change its name to First Pacific Bank
Credit Union Activity
Pacific Transportation Federal Credit Union, Gardena, to merge with and into Credit Union of Southern California, Anaheim
Printing Industries Credit Union, Riverside, to merge with and into Credit Union of Southern California, Anaheim
Premium Finance Company Activity
New Premium Finance Company
Southern Transportation Finance, Inc.
253 Whigham Dairy Road, Bainbridge, Georgia
Foreign (Other Nation) Bank Activity
MUFG Bank, Ltd. (Representative offices)
- 6 Pointe Drive, Brea
- 10100 Santa Monica Boulevard, Los Angeles
- 18300 Von Karman Avenue, Irvine
- 2882 Sand Hill Road, Menlo Park
- 1980 Saturn Street, Monterey Park
- 1221 Broadway, Oakland
- 303 Twin Dolphin Drive, Redwood City
- 12760 High Bluff Drive, San Diego
- 21700 Oxnard Street, Woodland Hills
- 530 B Street, San Diego
ING Bank N.V.
333 S. Grand Avenue, Los Angeles
Foreign (Other State) Credit Union Activity
Rogue Credit Union
Address to be determined
Money Transmitter Activity
Tango Card, Inc.
Visa Global Services Inc.
Acquisition of Control
BCP Special Opportunities Fund II Holdings, LP, to acquire control of DolEx Dollar Express, Inc.
Mobius Parent Corp, to acquire control of MoneyGram Payment Systems, Inc.
Money Transfer Acquisition, Inc., to acquire control of Barri Money Services, LLC
Neon NewCo Corporation, to acquire control of Netspend Corporation
WizzFinancial US LLC, to acquire control of Moneydart Global Services, Inc.
CLOTHILDE V. HEWLETT Commissioner, Department of Financial Protection and Innovation
The December 2022 Monthly Bulletin covers the month ended November 30, 2022.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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