Recent developments about the New York State Department of Financial Services
(Not affiliated with NYDFS; just a blog.)
According to a stipulation filed (1822000-1822445-stipulation) in the BlockFi bankruptcy proceeding in New Jersey: • NYDFS had asserted unliquidated claims for violation of Financial Services Law § 408, one of its omnibus enforcement authorities, and the BitLicense Regulation, 23 N.Y.C.R.R. Part 200 • BlockFi does not appear to have ever obtained a license or charter from NYDFS. That … Read more
NYDFS penalized Genesis Global Trading, a licensee that served primarily as an OTC trading shop, $8MM for cybersecurity, BSA/AML, and Consumer Protection violations. Genesis Global has now surrendered its license, apparently after having ceased trading activity some time ago. According to DFS allegations: • Genesis Global did not conduct an enterprise-wide risk assessment until 2022, despite … Read more
According to the DFS allegations in the Four Consent Orders (found here): • Following a market conduct investigation in 2018, DFS has continued to penalize insurance companies for failing to timely report certain insured vehicle information to the NY DMV • DFS fined Allstate Insurance group $796,000; Farmers Insurance Group $764,000; Tokio Marine Insurance Group $720,000; and … Read more
NYDFS continues to roll out enforcement actions for cybersecurity lapses. The latest is with lender OneMain. According to NYDFS allegations in its Consent Order: • This is the second cybersecurity enforcement action to arise from a routine examination, instead of a Cybersecurity Event. • Meaning, as noted before, these enforcement actions are now routine. • Third Party Risk … Read more
The New York Attorney General entered into a settlement with BitCoin seller and NYDFS licensee Coin Cafe over allegations of failure to register with the NYAG’s Investor Protection Bureau and charging excessive fees. According to NYAG allegations in its Assurance of Discontinuance: • Coin Café — apparently only a seller of only Bitcoin – nonetheless failed … Read more
More from Fortune on the proposed legislation from the NYAG and an apparent rift with NYDFS. But what does this mean for passage/enactment? From the Forbes article: “Another point of contention has turned on the extent to which DFS was consulted in the drafting of the bill. Among the endorsements for the legislation in the … Read more
Advancing a key agenda item from the the last several administrations, DFS has published aggregate gender and racial/ethnic data of board members and senior management for regulated banks, non-depository institutions, and insurance companies. According to DFS, it collected the data from insurance companies with more than $100 million in 2019 New York premiums, regulated banks … Read more
Here are some quick impressions: • Provides expansive new authority to the NYAG to regulate and enforce in the crypto market • Appears to codify the DFS BitLicense, which is now set by regulation • Sets up competing enforcement regimes and specifically contemplates conflict by requiring the “attorney general and the [DFS] superintendent shall cooperate, coordinate and assist … Read more
Rep. Ritchie Torres said today that he would not support legislation that preempts NYDFS’ powers to regulate cryptocurrency or otherwise encroaches on New York’s sovereignty in regulating financial services. [Video here]. He made these comments today at the House Financial Services Committee hearing today on stablecoins, at which Superintendent Harris testified. Other takeaways from today’s … Read more
According to Fortune: “For the eight months—from April 29 to Dec. 27, when Olson joined the company—SVB went without an established chief risk officer, the company’s risk senior leadership held the responsibilities of the role.” Arguably, not a best practice.