Rules of Practice and Procedure, 95412-95419 [2016-31240]
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Federal Register / Vol. 81, No. 249 / Wednesday, December 28, 2016 / Rules and Regulations
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the current NRC dose terminology. On
the other hand, one commenter
indicated that terminology should be
adopted in order to be consistent with
the terminology used by the U.S.
Department of Energy, as revised in
2007, but use of the updated
methodology should be delayed until
the updated dose coefficients are
published by ICRP. Finally, one
commenter supported revision of 10
CFR part 20 to align more closely with
ICRP Publication 103 methodology and
terminology, but acknowledged that the
realignment may result in little, if any,
improvement in occupational or public
safety.
As explained in SECY–16–0009, the
additional resource expenditure in this
area did not result in a recommendation
for a revised rule. The current NRC
regulatory framework continues to
provide adequate protection of the
health and safety of workers, the public,
and the environment. In addition, a
majority of the comments submitted and
meeting feedback from stakeholders did
not support the proposed changes.
Therefore, the NRC staff believes that
there is minimal adverse impact on the
NRC’s mission, principles, or values by
discontinuing this rulemaking. In the
SRM for SECY–16–0009, the
Commission approved the NRC staff’s
recommendation to discontinue this
rulemaking.
IV. Reactor Effluents (RIN 3150–AJ38;
NRC–2014–0044)
The NRC published an ANPR in the
Federal Register (80 FR 25237; May 4,
2015), to obtain input from members of
the public and other stakeholders on the
development of a regulatory basis for a
potential revision to 10 CFR part 50,
appendix I, the NRC’s regulations for
licensees of light water cooled reactors
to meet the ALARA standard with
respect to radioactive effluents from
such reactor sites. The publication of
the 10 CFR part 50, appendix I, ANPR
was also in response to the
Commission’s direction in the SRM for
SECY–12–0064, which stated that the
NRC staff should, along with the
development of the draft regulatory
basis for the 10 CFR part 20 regulations,
engage in a parallel effort to develop a
draft regulatory basis for aligning the 10
CFR part 50, appendix I, design
objectives with the most recent
terminology and dose-related
methodology published in ICRP
Publication 103. In the ANPR, the NRC
staff identified specific questions and
issues with respect to a possible
revision of 10 CFR part 50, appendix I,
and related guidance. The NRC staff
planned to consider public and other
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stakeholder input on these questions
and issues to develop the regulatory
basis.
The NRC received 20 comment letters
on the 10 CFR part 50, appendix I,
ANPR. The comments, in addition to
feedback from the August 24, 2015, NRC
public meeting held in Rockville, MD,
included the following: (1) The
potential revisions will result in
intangible benefits such as transparency
in the regulatory process, consistent
terminology and methodology, and
comparison of technologies and
operations across international borders
and environmental media; (2)
implementation of the potential
revisions will result in a resource
burden; (3) the potential revisions are
unlikely to be cost-beneficial with little
to no incremental improvement in the
health and safety of occupational
workers, the public, or the environment;
(4) in lieu of the potential revisions,
limited changes in the NRC guidance to
address changes in methodology and
terminology would require fewer
licensee resources; and (5) should the
NRC proceed with rulemaking,
consideration of on-going work on the
accuracy of the effluent doses to
members of the public could further
inform the proposed rulemaking.
Overall, the commenters recognized a
need to update the NRC’s regulations
based on the advances in science and
technology; however, the
implementation costs would be a
significant burden to the industry that
would not be justified by improvements
in public and occupational protection.
In addition, some commenters provided
additional options for the NRC to
consider, should it continue with
rulemaking, including limited scope
updates to existing NRC guidance.
As explained in SECY–16–0009, the
staff recommended that this rulemaking
activity be discontinued because during
the development of the regulatory basis
for the proposed rule change, the staff
determined that the regulations do not
require changes at this time. Therefore,
based on this determination and
consideration of the comments received,
the NRC staff believes that there is
minimal adverse impact on the NRC’s
mission, principles, or values by
discontinuing this rulemaking. In the
SRM for SECY–16–0009, the
Commission approved the NRC staff’s
recommendation to discontinue this
rulemaking.
V. Conclusion
The NRC is no longer pursuing the
revisions to regulations in 10 CFR part
20 and 10 CFR part 50, appendix I, for
the reasons discussed in this document.
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In the next edition of the Unified
Agenda, the NRC will update the entry
for these rulemaking activities and
reference this document to indicate that
they are no longer being pursued. These
rulemaking activities will appear in the
completed actions section of that
edition of the Unified Agenda but will
not appear in future editions. If the NRC
decides to pursue similar or related
rulemaking activities in the future, it
will inform the public through new
rulemaking entries in the Unified
Agenda.
Dated at Rockville, Maryland, this 14th day
of December 2016.
For the Nuclear Regulatory Commission.
Michael R. Johnson,
Acting Executive Director for Operations.
[FR Doc. 2016–31372 Filed 12–27–16; 8:45 am]
BILLING CODE 7590–01–P
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 308
RIN 3064–AE52
Rules of Practice and Procedure
Federal Deposit Insurance
Corporation.
ACTION: Final rule.
AGENCY:
The Federal Deposit
Insurance Corporation (FDIC) is
adjusting the maximum amount of each
civil money penalty (CMP) within its
jurisdiction to account for inflation.
This action is required by the Federal
Civil Penalties Inflation Adjustment Act
Improvements Act of 2015 (2015
Adjustment Act). The FDIC is also
amending its rules of practice and
procedure to correct a technical error
from the previous inflation-adjustment
rulemaking.
SUMMARY:
This rule is effective on January
15, 2017.
FOR FURTHER INFORMATION CONTACT: Seth
P. Rosebrock, Supervisory Counsel,
Legal Division (202) 898–6609, or
Graham N. Rehrig, Senior Attorney,
Legal Division (202) 898–3829.
SUPPLEMENTARY INFORMATION:
DATES:
I. Policy Objectives
The Final Rule changes the maximum
limit for CMPs according to inflation as
mandated by Congress in the 2015
Adjustment Act.1 The intended effect of
annually adjusting maximum civil
money penalties in accordance with
changes in the Consumer Price Index is
1 Public
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to minimize any distortion in the real
value of those maximums due to
inflation, thereby promoting a more
consistent deterrent effect in the
structure of CMPs. The Final Rule also
amends the FDIC’s rules of practice and
procedure under 12 CFR part 308 to
remove a technical error found at 12
CFR 308.132(c).
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II. Background
The FDIC assesses CMPs under
section 8(i) of the Federal Deposit
Insurance Act (FDIA), 12 U.S.C. 1818,
and a variety of other statutes.2 Congress
established maximum penalties that
could be assessed under these statutes.
In many cases, these statutes contain
multiple penalty tiers, permitting the
assessment of penalties at various levels
depending upon the severity of the
misconduct at issue.3
In 1990, Congress determined that the
assessment of CMPs plays ‘‘an
important role in deterring violations
and furthering the policy goals
embodied in such laws and regulations’’
and concluded that ‘‘the impact of many
civil monetary penalties has been and is
diminished due to the effect of
inflation.’’ 4 Consequently, Congress
required federal agencies with authority
to impose CMPs to periodically adjust
by rulemaking the maximum CMPs
which these agencies were authorized to
impose in order to ‘‘maintain the
deterrent effect of civil monetary
penalties and promote compliance with
the law.’’ 5 Under the 1990 Adjustment
Act, the FDIC adjusted its CMP amounts
every four years.6
In 2015, Congress revised the process
by which federal agencies adjust
applicable CMPs for inflation.7 Under
the 2015 Adjustment Act, the FDIC is
required to (1) adjust the CMP levels
with an initial catch-up adjustment
through an interim final rulemaking and
(2) make subsequent annual adjustments
for inflation.8 The initial and
2 See, e.g., 12 U.S.C. 1972(2)(F) (authorizing the
FDIC to impose CMPs for violations of the Bank
Holding Company Act of 1970 related to prohibited
tying arrangements); 15 U.S.C. 78u–2 (authorizing
the FDIC to impose CMPs for violations of certain
provisions of the Securities Exchange Act of 1934);
42 U.S.C. 4012a(f) (authorizing the FDIC to impose
CMPs for pattern or practice violations of the Flood
Disaster Protection Act).
3 For example, Section 8(i)(2) of the FDIA, 12
U.S.C. 1818(i)(2), provides for three tiers of CMPs,
with the size of such CMPs increasing with the
gravity of the misconduct.
4 Section 2 of the Federal Civil Penalties Inflation
Adjustment Act of 1990 (1990 Adjustment Act).
Public Law 101–410, 104 Stat. 890 (amended 2015)
(codified as amended at 28 U.S.C. 2461 note).
5 Id.
6 See, e.g., 77 FR 74573 (Dec. 17, 2012).
7 See Public Law 114–74, sec. 701, 129 Stat. 584.
8 See id. at sec. 701(b).
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subsequent adjustments apply to all
CMPs covered by the 2015 Adjustment
Act.9 The FDIC published its interim
final rulemaking—containing the initial
catch-up adjustments—on June 29,
2016.10 The 2015 Adjustment Act
requires subsequent annual adjustments
to be made by January 15 of each year.11
Although the 2015 Adjustment Act
increases the maximum penalty that
may be assessed under each applicable
statute, the FDIC possesses discretion to
impose CMP amounts below the
maximum level in accordance with the
severity of the misconduct at issue.
When making a determination as to the
appropriate level of any given penalty,
the FDIC is guided by statutory factors
set forth in section 8(i)(2)(G) of the
FDIA, 12 U.S.C. 1818(i)(2)(G), and those
factors identified in the Interagency
Policy Statement Regarding the
Assessment of CMPs by the Federal
Financial Institutions Regulatory
Agencies.12 Such factors include, but
are not limited to, the gravity and
duration of the misconduct, and the
intent related to the misconduct.
While the 2015 Adjustment Act
required the FDIC to initially adjust its
maximum CMP amounts through an
interim final rulemaking, for subsequent
adjustments, the FDIC ‘‘shall adjust
[CMPs] and shall make the adjustment
notwithstanding section 553 of title 5,
United States Code’’ (the Administrative
Procedure Act).13 The FDIC, therefore,
is not obligated to publish the
subsequent adjustments through noticeand-comment rulemaking, and the FDIC
9 See Public Law 101–410, sec. 3(2), 104 Stat. 890
(amended 2015) (codified as amended at 28 U.S.C.
2461 note).
10 81 FR 42235. Although the FDIC was not
obligated to solicit comments for the interim final
rule, the FDIC asked for comments from the public
and received one comment. See https://
www.fdic.gov/regulations/laws/federal/2016/2016_
rules_of_practice_and_procedure_
3064%E2%80%93AE43.html. The comment noted
that the FDIC interim final rule was issued
according to a statutory mandate, but expressed
disappointment that the FDIC ‘‘did not promulgate
[its] interim final CMP rules pursuant to the normal
administrative process, whereby interested
stakeholders among the public have an opportunity
to comment on a ‘Proposed Rule’ before it is
finalized.’’ Id. The commenter made no specific
request that the final rule be amended or changed,
however, but requested that the FDIC exercise its
‘‘discretion to impose CMP amounts below the
maximum level in accordance with the severity of
the misconduct at issue.’’ Id. As noted above, the
FDIC followed an explicit statutory mandate in
creating the interim final rule. Moreover, the FDIC
intends to continue to exercise its discretion—in
accordance with statutory requirements—in
imposing appropriate CMP amounts. See 12 U.S.C.
1818(i)(2)(G).
11 Public Law 114–74, sec. 701(b), 129 Stat. 584.
12 63 FR 30227 (June 3, 1998).
13 Public Law 114–74, sec. 701(b), 129 Stat. 584
(emphasis added).
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is publishing the adjustments through a
final rule.
Moreover, the FDIC is correcting a
technical error found at 12 CFR
308.132(c). During the last CMPadjustment process, the FDIC sought to
revise 12 CFR 308.132(c) to articulate
the FDIC Board’s authority to assess
CMPs. The FDIC also intended to
transfer the substance of current 12 CFR
308.132(c)(2) through 12 CFR
308.132(c)(3)(xvii) to current 12 CFR
308.132(d), and to remove the nowduplicative language of 12 CFR
308.132(c)(2) through 12 CFR
308.132(c)(3)(xvii). The Final Rule
amends 12 CFR 308.132(c) accordingly
by removing 12 CFR 308.132(c)(2)
through 12 CFR 308.132(c)(3)(xvii) and
retitling current 12 CFR 308.132(c)(1).
The FDIC believes that all of these
changes are technical and ministerial in
character, and therefore, the FDIC is not
soliciting public comment on the
changes.
III. Description and Expected Effects of
the Final Rule
The Final Rule modifies the
maximum limit for CMPs according to
inflation as mandated by Congress in
the 2015 Adjustment Act. The 2015
Adjustment Act directs federal agencies
to follow guidance issued by the Office
of Management and Budget (OMB) on
December 16, 2016 (OMB Guidance),
when calculating new maximum
penalty levels.14 The adjustments are to
be based on the percent change between
the Consumer Price Index for all Urban
Consumers (CPI–U) 15 for October 2015
and the October 2016 CPI–U.
Summary of the FDIC’s Calculations
In keeping with the OMB Guidance,
the FDIC multiplied each of its CMP
amounts by the relevant inflation
factor.16 After applying the multiplier,
the FDIC rounded each penalty level to
the nearest dollar. In making these
calculations, the FDIC consulted with
staff from the Office of the Comptroller
of the Currency, the Board of Governors
for the Federal Reserve System, the
National Credit Union Administration,
14 See OMB, Implementation of the 2017 Annual
Adjustment Pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements Act of
2015, M–17–11 (Dec. 16, 2016), available at https://
www.whitehouse.gov/sites/default/files/omb/
memoranda/2017/m-17-11_0.pdf (noting that the
applicable 2017 CMP-adjustment multiplier is
1.01636).
15 The CPI–U is compiled by the Bureau of
Statistics of the Department of Labor.
16 Under the 1990 Adjustment Act, adjustments
have been made only to CMPs that are for specific
dollar amounts or maximums. CMPs that are
assessed based upon a fixed percentage of an
institution’s total assets are not subject to
adjustment.
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and the Bureau of Consumer Financial
Protection to ensure that the FDIC’s
calculations and adjustments are
consistent with those being proposed by
other federal financial regulators for the
same statutes.
The Adjusted CMP Amounts
The following chart displays the
adjusted CMP amounts for each CMP
identified in 12 CFR part 308.17 The
following chart reflects the maximum
CMP amounts that may be assessed after
January 15, 2017—the effective date of
the 2017 annual adjustment—including
assessments whose associated violations
occurred on or after November 2,
2015.18
MAXIMUM CIVIL MONEY PENALTY AMOUNTS
Current maximum
CMP
(through January
14, 2017)
U.S. Code citation
12 U.S.C. 1464(v)
Tier One CMP ..................................................................................................................................
Tier Two CMP ..................................................................................................................................
Tier Three CMP ................................................................................................................................
12 U.S.C. 1467(d) ....................................................................................................................................
12 U.S.C. 1817(a)
Tier One CMP ..................................................................................................................................
Tier Two CMP ..................................................................................................................................
Tier Three CMP ................................................................................................................................
12 U.S.C. 1817(c)
Tier One CMP ..................................................................................................................................
Tier Two CMP ..................................................................................................................................
Tier Three CMP ................................................................................................................................
12 U.S.C. 1818(i)(2)
Tier One CMP ..................................................................................................................................
Tier Two CMP ..................................................................................................................................
Tier Three CMP ................................................................................................................................
12 U.S.C. 1820(e)(4) ...............................................................................................................................
12 U.S.C. 1820(k)(6) ...............................................................................................................................
12 U.S.C. 1828(a)(3) ...............................................................................................................................
12 U.S.C. 1828(h)
For assessments < 10,000 ...............................................................................................................
12 U.S.C. 1829b(j) ...................................................................................................................................
12 U.S.C. 1832(c) ....................................................................................................................................
12 U.S.C. 1884 ........................................................................................................................................
12 U.S.C. 1972(2)(F)
Tier One CMP ..................................................................................................................................
Tier Two CMP ..................................................................................................................................
Tier Three CMP ................................................................................................................................
12 U.S.C. 3909(d) ....................................................................................................................................
15 U.S.C. 78u–2
Tier One CMP (individuals) ..............................................................................................................
Tier One CMP (others) .....................................................................................................................
Tier Two CMP (individuals) ..............................................................................................................
Tier Two CMP (others) .....................................................................................................................
Tier Three CMP (individuals) ...........................................................................................................
Tier Three penalty (others) ...............................................................................................................
15 U.S.C. 1639e(k)
First violation ....................................................................................................................................
Subsequent violations ......................................................................................................................
31 U.S.C. 3802 ........................................................................................................................................
42 U.S.C. 4012a(f) ...................................................................................................................................
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$3,787
37,872
1,893,610
9,468
3,787
37,872
1,893,610
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18 See
PO 00000
3,849
38,492
1,924,589
3,462
34,620
1,730,990
3,519
35,186
1,759,309
9,468
47,340
1,893,610
8,655
311,470
118
9,623
48,114
1,924,589
8,797
316,566
120
118
19,787
2,750
275
120
20,111
2,795
279
9,468
47,340
1,893,610
2,355
9,623
48,114
1,924,589
2,394
8,908
89,078
89,078
445,390
178,156
890,780
9,054
90,535
90,535
452,677
181,071
905,353
10,875
21,749
10,781
2,056
12 CFR 308.132(c)—Late or Misleading Reports of Condition and Income (Call Reports)
First Offense
25 million or more assets
1 to 15 days late .......................................................................................................................
16 or more days late .................................................................................................................
Less than 25 million assets
1 to 15 days late .......................................................................................................................
16 or more days late .................................................................................................................
17 As noted previously, the FDIC retains
discretion to impose CMPs in amounts below the
referenced maximums.
$3,849
38,492
1,924,589
9,623
11,053
22,105
10,957
2,090
Current maximum
amount
(through January
14, 2017)
CFR citation
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New maximum
amount
(beginning January
15, 2017)
$519
1,039
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$527
1,056
173
346
OMB Guidance at 4.
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Adjusted maximum
CMP
(beginning January
15, 2017)
176
352
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Current maximum
amount
(through January
14, 2017)
CFR citation
Subsequent Offenses
25 million or more assets
1 to 15 days late .......................................................................................................................
16 or more days late .................................................................................................................
The Expected Effects of the CMP
Adjustments
The CMP Adjustments are expected to
more precisely adjust CMP maximums
relative to inflation. These adjustments
are expected to minimize any year-toyear distortions in the real value of the
CMP maximums. These adjustments
will promote a more consistent
deterrent effect in the structure of CMPs.
As previously noted, the FDIC retains
discretion to impose CMP amounts
below the maximum level. The actual
number and size of CMPs assessed in
the future will depend on the
propensity and severity of the violations
committed by banks and institutionaffiliated parties, as well as the
particular statute that is at issue. Such
future violations cannot be reliably
forecast. It is expected that the FDIC
will continue to exercise its discretion
to impose CMPs that are appropriate to
their severity.
The 2015 Adjustment Act will likely
result in a minimal increase in
administrative costs for the FDIC in
order to establish new inflation-adjusted
maximum CMPs each year. Because
these calculations are relatively simple,
the number of labor hours necessary to
perform this task is likely to be
insignificant relative to total
enforcement labor hours for the
Corporation.
IV. Alternatives Considered
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The 2015 Adjustment Act mandates
the frequency of the inflation
adjustment and the measure of inflation
to be used in making these adjustments.
This statute also provides that the FDIC
is not required to proceed through
notice-and-comment rulemaking under
the Administrative Procedure Act in
making annual CMP adjustments.
Therefore, the FDIC has not considered
alternatives to the CMP Adjustments.
V. Request for Comment
The 2015 Adjustment Act requires the
FDIC to adjust its maximum CMP
amounts ‘‘notwithstanding section 553
of title 5, United States Code,’’ 19 and
provides the specific adjustments to be
made. Moreover, the CMP Adjustments
and the revisions to the CFR are
ministerial and technical; therefore, the
FDIC is not required to complete a
notice-and-comment rulemaking
process prior to making the adjustments.
VI. Regulatory Analysis
Riegle Community Development and
Regulatory Improvement Act
Section 302 of the Riegle Community
Development and Regulatory
Improvement Act 20 generally requires
that regulations prescribed by federal
banking agencies which impose
additional reporting, disclosures, or
other new requirements on insured
depository institutions take effect on the
first day of a calendar quarter unless the
regulation is required to take effect on
another date pursuant to another act of
Congress or the agency determines for
good cause that the regulation should
become effective on an earlier date.
This Final Rule does not impose any
new or additional reporting, disclosures,
or other requirements on insured
depository institutions. Therefore, the
Final Rule is not subject to the
requirements of this statute.
Regulatory Flexibility Act
An initial regulatory flexibility
analysis under the Regulatory
Flexibility Act 21 (RFA) is required only
when an agency must publish a general
notice of proposed rulemaking. As
noted above, the FDIC determined that
publication of a notice of proposed
rulemaking is not necessary for the
Final Rule. Accordingly, the RFA does
not require an initial regulatory
flexibility analysis. Nevertheless, the
FDIC considered the likely impact of
Final Rule on small entities. From 2011
through 2015, on average, only 1.6
percent of FDIC-supervised institutions
were ordered to pay a CMP each year.
Accordingly, the FDIC believes that the
Final Rule will not have a significant
impact on a substantial number of small
entities.
20 12
19 Public
Law 114–74, sec. 701(b), 129 Stat. 584.
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21 5
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U.S.C. 4802.
U.S.C. 603.
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95415
New maximum
amount
(beginning January
15, 2017)
865
1,731
879
1,759
Small Business Regulatory Enforcement
Fairness Act
The OMB has determined that the
Final Rule is not a ‘‘major rule’’ within
the meaning of the relevant sections of
the Small Business Regulatory
Enforcement Act of 1996 (SBREFA).22
As required by SBREFA, the FDIC will
submit the Final Rule and other
appropriate reports to Congress and the
Government Accountability Office for
review.
The Omnibus Consolidated and
Emergency Supplemental
Appropriations Act, 1999: Assessment
of Federal Regulations and Policies on
Families
The FDIC determined that the Final
Rule will not affect family wellbeing
within the meaning of section 654 of the
Omnibus Consolidated and Emergency
Supplemental Appropriations Act,
1999.23
Paperwork Reduction Act
The Final Rule does not create any
new, or revise any existing, collections
of information under section 3504(h) of
the Paperwork Reduction Act of 1980.24
Consequently, no information collection
request will be submitted to the OMB
for review.
Plain Language Act
Section 722 of the Gramm-LeachBliley Act requires the FDIC to use plain
language in all proposed and final rules
published after January 1, 2000.25
Accordingly, the FDIC has attempted to
write the Final Rule in clear and
comprehensible language.
List of Subjects in 12 CFR Part 308
Administrative practice and
procedure, Banks, Banking, Claims,
Crime, Equal access to justice, Ex parte
communications, Hearing procedure,
Lawyers, Penalties, State nonmember
banks.
22 5
U.S.C. 801 et seq.
Law 105–277, 112 Stat. 2681 (1998).
24 44 U.S.C. 3501 et seq.
25 Public Law 106–102, 113 Stat. 1338 (Nov. 12,
1999).
23 Public
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For the reasons set forth in the
preamble, the FDIC amends 12 CFR part
308 as follows:
PART 308—RULES OF PRACTICE AND
PROCEDURE
1. The authority citation for part 308
continues to read as follows:
■
Authority: 5 U.S.C. 504, 554–557; 12
U.S.C. 93(b), 164, 505, 1464, 1467(d), 1467a,
1468, 1815(e), 1817, 1818, 1819, 1820, 1828,
1829, 1829(b), 1831i, 1831m(g)(4), 1831o,
1831p–1, 1832(c), 1884(b), 1972, 3102,
3108(a), 3349, 3909, 4717, 5412(b)(2)(C),
5414(b)(3); 15 U.S.C. 78(h) and (i), 78o(c)(4),
78o–4(c), 78o-5, 78q–1, 78s, 78u, 78u–2, 78u–
3, 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461
note; 31 U.S.C. 330, 5321; 42 U.S.C. 4012a;
Pub. L. 104–134, sec. 31001(s), 110 Stat.
1321; Pub. L. 109–351, 120 Stat. 1966; Pub.
L. 111–203, 124 Stat. 1376; Pub. L. 114–74,
sec. 701, 129 Stat. 584.
2. Revise § 308.116(b)(4) to read as
follows:
■
§
308.116 Assessment of penalties.
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(b) * * *
(4) Adjustment of civil money
penalties by the rate of inflation
pursuant to the Federal Civil Penalties
Inflation Adjustment Act Improvements
Act of 2015. After January 15, 2017, for
violations that occurred on or after
November 2, 2015:
(i) Any person who has engaged in a
violation as set forth in paragraph (b)(1)
of this section shall forfeit and pay a
civil money penalty of not more than
$9,623 for each day the violation
continued.
(ii) Any person who has engaged in a
violation, unsafe or unsound practice or
breach of fiduciary duty, as set forth in
paragraph (b)(2) of this section, shall
forfeit and pay a civil money penalty of
not more than $48,114 for each day such
violation, practice or breach continued.
(iii) Any person who has knowingly
engaged in a violation, unsafe or
unsound practice or breach of fiduciary
duty, as set forth in paragraph (b)(3) of
this section, shall forfeit and pay a civil
money penalty not to exceed:
(A) In the case of a person other than
a depository institution—$1,924,589 per
day for each day the violation, practice
or breach continued; or
(B) In the case of a depository
institution—an amount not to exceed
the lesser of $1,924,589 or one percent
of the total assets of such institution for
each day the violation, practice or
breach continued.
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■ 3. Revise § 308.132(c) and (d) to read
as follows:
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§ 308.132
Assessment of penalties.
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(c) Authority of the Board of Directors.
The Board of Directors or its designee
may assess civil money penalties under
section 8(i) of the FDIA (12 U.S.C.
1818(i)), and § 308.1(e) of the Uniform
Rules (this part).
(d) Maximum civil money penalty
amounts. Pursuant to the Federal Civil
Penalties Inflation Adjustment Act
Improvements Act of 2015, after January
15, 2017, for violations that occurred on
or after November 2, 2015, the Board of
Directors or its designee may assess civil
money penalties in the maximum
amounts as follows:
(1) Civil money penalties assessed
pursuant to 12 U.S.C. 1464(v) for late
filing or the submission of false or
misleading certified statements by State
savings associations. Pursuant to section
5(v) of the Home Owners’ Loan Act (12
U.S.C. 1464(v)), the Board of Directors
or its designee may assess civil money
penalties as follows:
(i) Late filing—Tier One penalties. In
cases in which an institution fails to
make or publish its Report of Condition
and Income (Call Report) within the
appropriate time periods, a civil money
penalty of not more than $3,849 per day
may be assessed where the institution
maintains procedures in place
reasonably adapted to avoid inadvertent
error and the late filing occurred
unintentionally and as a result of such
error; or the institution inadvertently
transmitted a Call Report that is
minimally late. For penalties assessed
after January 15, 2017, for violations of
this paragraph (d)(3)(i) that occurred on
or after November 2, 2015, the following
maximum Tier One penalty amounts
contained in paragraphs (d)(1)(i)(A) and
(B) of this section shall apply for each
day that the violation continues.
(A) First offense. Generally, in such
cases, the amount assessed shall be $527
per day for each of the first 15 days for
which the failure continues, and $1,056
per day for each subsequent day the
failure continues, beginning on the
sixteenth day. For institutions with less
than $25,000,000 in assets, the amount
assessed shall be the greater of $176 per
day or 1/1000th of the institution’s total
assets (1/10th of a basis point) for each
of the first 15 days for which the failure
continues, and $352 or 1/500th of the
institution’s total assets, 1⁄5 of a basis
point) for each subsequent day the
failure continues, beginning on the
sixteenth day.
(B) Subsequent offense. Where the
institution has been delinquent in
making or publishing its Call Report
within the preceding five quarters, the
amount assessed for the most current
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failure shall generally be $879 per day
for each of the first 15 days for which
the failure continues, and $1,759 per
day for each subsequent day the failure
continues, beginning on the sixteenth
day. For institutions with less than
$25,000,000 in assets, those amounts,
respectively, shall be 1/500th of the
bank’s total assets and 1/250th of the
institution’s total assets.
(C) Lengthy or repeated violations.
The amounts set forth in this paragraph
(d)(1)(i) will be assessed on a case by
case basis where the amount of time of
the institution’s delinquency is lengthy
or the institution has been delinquent
repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary
circumstances outside the control of the
institution, penalties assessed for late
filing shall not be waived.
(ii) Late-filing—Tier Two penalties.
Where an institution fails to make or
publish its Call Report within the
appropriate time period, the Board of
Directors or its designee may assess a
civil money penalty of not more than
$38,492 per day for each day the failure
continues.
(iii) False or misleading reports or
information—(A) Tier One penalties. In
cases in which an institution submits or
publishes any false or misleading Call
Report or information, the Board of
Directors or its designee may assess a
civil money penalty of not more than
$3,849 per day for each day the
information is not corrected, where the
institution maintains procedures in
place reasonably adapted to avoid
inadvertent error and the violation
occurred unintentionally and as a result
of such error; or the institution
inadvertently transmits a Call Report or
information that is false or misleading.
(B) Tier Two penalties. Where an
institution submits or publishes any
false or misleading Call Report or other
information, the Board of Directors or its
designee may assess a civil money
penalty of not more than $38,492 per
day for each day the information is not
corrected.
(C) Tier Three penalties. Where an
institution knowingly or with reckless
disregard for the accuracy of any Call
Report or information submits or
publishes any false or misleading Call
Report or other information, the Board
of Directors or its designee may assess
a civil money penalty of not more than
the lesser of $1,924,589 or 1 percent of
the institution’s total assets per day for
each day the information is not
corrected.
(iv) Mitigating factors. The amounts
set forth in this paragraph (d)(1) may be
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reduced based upon the factors set forth
in paragraph (b) of this section.
(2) Civil money penalties assessed
pursuant to 12 U.S.C. 1467(d) for refusal
by an affiliate of a State savings
association to allow examination or to
provide required information during an
examination. Pursuant to section 9(d) of
the Home Owners’ Loan Act (12 U.S.C.
1467(d)), civil money penalties may be
assessed against any State savings
association if an affiliate of such an
institution refuses to permit a dulyappointed examiner to conduct an
examination or refuses to provide
information during the course of an
examination as set forth 12 U.S.C.
1467(d), in an amount not to exceed
$9,623 for each day the refusal
continues.
(3) Civil money penalties assessed
pursuant to 12 U.S.C. 1817(a) for late
filings or the submission of false or
misleading reports of condition.
Pursuant to section 7(a) of the FDIA (12
U.S.C. 1817(a)), the Board of Directors
or its designee may assess civil money
penalties as follows:
(i) Late filing—Tier One penalties. In
cases in which an institution fails to
make or publish its Report of Condition
and Income (Call Report) within the
appropriate time periods, a civil money
penalty of not more than $3,849 per day
may be assessed where the institution
maintains procedures in place
reasonably adapted to avoid inadvertent
error and the late filing occurred
unintentionally and as a result of such
error; or the institution inadvertently
transmitted a Call Report that is
minimally late. For penalties assessed
after January 15, 2017, for violations of
this paragraph (d)(3)(i) that occurred on
or after November 2, 2015, the following
maximum Tier One penalty amounts
contained in paragraphs (d)(3)(i)(A) and
(B) of this section shall apply for each
day that the violation continues.
(A) First offense. Generally, in such
cases, the amount assessed shall be $527
per day for each of the first 15 days for
which the failure continues, and $1,056
per day for each subsequent day the
failure continues, beginning on the
sixteenth day. For institutions with less
than $25,000,000 in assets, the amount
assessed shall be the greater of $176 per
day or 1/1000th of the institution’s total
assets (1/10th of a basis point) for each
of the first 15 days for which the failure
continues, and $352 or 1/500th of the
institution’s total assets, (1⁄5 of a basis
point) for each subsequent day the
failure continues, beginning on the
sixteenth day.
(B) Subsequent offense. Where the
institution has been delinquent in
making or publishing its Call Report
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within the preceding five quarters, the
amount assessed for the most current
failure shall generally be $879 per day
for each of the first 15 days for which
the failure continues, and $1,759 per
day for each subsequent day the failure
continues, beginning on the sixteenth
day. For institutions with less than
$25,000,000 in assets, those amounts,
respectively, shall be 1/500th of the
bank’s total assets and 1/250th of the
institution’s total assets.
(C) Lengthy or repeated violations.
The amounts set forth in this paragraph
(d)(3)(i) will be assessed on a case by
case basis where the amount of time of
the institution’s delinquency is lengthy
or the institution has been delinquent
repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary
circumstances outside the control of the
institution, penalties assessed for late
filing shall not be waived.
(ii) Late-filing—Tier Two penalties.
Where an institution fails to make or
publish its Call Report within the
appropriate time period, the Board of
Directors or its designee may assess a
civil money penalty of not more than
$38,492 per day for each day the failure
continues.
(iii) False or misleading reports or
information—(A) Tier One penalties. In
cases in which an institution submits or
publishes any false or misleading Call
Report or information, the Board of
Directors or its designee may assess a
civil money penalty of not more than
$3,849 per day for each day the
information is not corrected, where the
institution maintains procedures in
place reasonably adapted to avoid
inadvertent error and the violation
occurred unintentionally and as a result
of such error; or the institution
inadvertently transmits a Call Report or
information that is false or misleading.
(B) Tier Two penalties. Where an
institution submits or publishes any
false or misleading Call Report or other
information, the Board of Directors or its
designee may assess a civil money
penalty of not more than $38,492 per
day for each day the information is not
corrected.
(C) Tier Three penalties. Where an
institution knowingly or with reckless
disregard for the accuracy of any Call
Report or information submits or
publishes any false or misleading Call
Report or other information, the Board
of Directors or its designee may assess
a civil money penalty of not more than
the lesser of $1,924,589 or 1 percent of
the institution’s total assets per day for
each day the information is not
corrected.
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(iv) Mitigating factors. The amounts
set forth in this paragraph (d)(3) may be
reduced based upon the factors set forth
in paragraph (b) of this section.
(4) Civil money penalties assessed
pursuant to 12 U.S.C. 1817(c) for late
filing or the submission of false or
misleading certified statements. Tier
One civil money penalties may be
assessed pursuant to section 7(c)(4)(A)
of the FDIA (12 U.S.C. 1817(c)(4)(A)) in
an amount not to exceed $3,519 for each
day during which the failure to file
continues or the false or misleading
information is not corrected. Tier Two
civil money penalties may be assessed
pursuant to section 7(c)(4)(B) of the
FDIA (12 U.S.C. 1817(c)(4)(B)) in an
amount not to exceed $35,186 for each
day during which the failure to file
continues or the false or misleading
information is not corrected. Tier Three
civil money penalties may be assessed
pursuant to section 7(c)(4)(C) in an
amount not to exceed the lesser of
$1,759,309 or 1 percent of the total
assets of the institution for each day
during which the failure to file
continues or the false or misleading
information is not corrected.
(5) Civil money penalties assessed
pursuant to section 8(i)(2) of the FDIA.
Tier One civil money penalties may be
assessed pursuant to section 8(i)(2)(A) of
the FDIA (12 U.S.C. 1818(i)(2)(A)) in an
amount not to exceed $9,623 for each
day during which the violation
continues. Tier Two civil money
penalties may be assessed pursuant to
section 8(i)(2)(B) of the FDIA (12 U.S.C.
1818(i)(2)(B)) in an amount not to
exceed $48,114 for each day during
which the violation, practice or breach
continues. Tier Three civil money
penalties may be assessed pursuant to
section 8(i)(2)(C) (12 U.S.C.
1818(i)(2)(C)) in an amount not to
exceed, in the case of any person other
than an insured depository institution
$1,924,589 or, in the case of any insured
depository institution, an amount not to
exceed the lesser of $1,924,589 or 1
percent of the total assets of such
institution for each day during which
the violation, practice, or breach
continues.
(i) Pursuant to 7(j)(16) of the FDIA (12
U.S.C. 1817(j)(16)), a civil money
penalty may be assessed for violations
of change in control of insured
depository institution provisions
pursuant to section 8(i)(2) of the FDIA
(12 U.S.C. 1818(i)(2)) in the amounts set
forth in this paragraph (d)(5).
(ii) Pursuant to the International
Banking Act of 1978 (IBA) (12 U.S.C.
3108(b)), civil money penalties may be
assessed for failure to comply with the
requirements of the IBA pursuant to
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section 8(i)(2) of the FDIA (12 U.S.C.
1818(i)(2)), in the amounts set forth in
this paragraph (d)(5).
(iii) Pursuant to section 1120(b) of the
Financial Institutions Recovery, Reform,
and Enforcement Act of 1989 (FIRREA)
(12 U.S.C. 3349(b)), where a financial
institution seeks, obtains, or gives any
other thing of value in exchange for the
performance of an appraisal by a person
that the institution knows is not a state
certified or licensed appraiser in
connection with a federally related
transaction, a civil money penalty may
be assessed pursuant to section 8(i)(2) of
the FDIA (12 U.S.C. 1818(i)(2)) in the
amounts set forth in this paragraph
(d)(5).
(iv) Pursuant to the Community
Development Banking and Financial
Institution Act (Community
Development Banking Act) (12 U.S.C.
4717(b)) a civil money penalty may be
assessed for violations of the
Community Development Banking Act
pursuant to section 8(i)(2) of the FDIA
(12 U.S.C. 1818(i)(2)), in the amount set
forth in this paragraph (d)(5).
(v) Civil money penalties may be
assessed pursuant to section 8(i)(2) of
the FDIA in the amounts set forth in this
paragraph (d)(5) for violations of various
consumer laws, including, but not
limited to, the Home Mortgage
Disclosure Act (12 U.S.C. 2804 et seq.
and 12 CFR 203.6), the Expedited Funds
Availability Act (12 U.S.C. 4001 et seq.),
the Truth in Savings Act (12 U.S.C. 4301
et seq.), the Real Estate Settlement
Procedures Act (12 U.S.C. 2601 et seq.),
the Truth in Lending Act (15 U.S.C.
1601 et seq.), the Fair Credit Reporting
Act (15 U.S.C. 1681 et seq.), the Equal
Credit Opportunity Act (15 U.S.C. 1691
et seq.), the Fair Debt Collection
Practices Act (15 U.S.C. 1692 et seq.),
the Electronic Funds Transfer Act (15
U.S.C. 1693 et seq.) and the Fair
Housing Act (42 U.S.C. 3601 et seq.).
(6) Civil money penalties assessed
pursuant to 12 U.S.C. 1820(e) for refusal
to allow examination or to provide
required information during an
examination. Pursuant to section
10(e)(4) of the FDIA (12 U.S.C.
1820(e)(4)), civil money penalties may
be assessed against any affiliate of an
insured depository institution that
refuses to permit a duly-appointed
examiner to conduct an examination or
to provide information during the
course of an examination as set forth in
section 20(b) of the FDIA (12 U.S.C.
1820(b)), in an amount not to exceed
$8,797 for each day the refusal
continues.
(7) Civil money penalties assessed
pursuant to 12 U.S.C. 1820(k) for
violation of one-year restriction on
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Federal examiners of financial
institutions. Pursuant to section 10(k) of
the FDIA (12 U.S.C. 1820(k)), the Board
of Directors or its designee may assess
a civil money penalty of up to $316,566
against any covered former Federal
examiner of a financial institution who,
in violation of section 10(k) of the FDIA
(12 U.S.C. 1820(k)) and within the oneyear period following termination of
government service as an employee,
serves as an officer, director, or
consultant of a financial or depository
institution, a holding company, or of
any other entity listed in section 10(k)
of the FDIA (12 U.S.C. 1820(k)), without
the written waiver or permission by the
appropriate Federal banking agency or
authority under section 10(k)(5) of the
FDIA (12 U.S.C. 1820(k)(5)).
(8) Civil money penalties assessed
pursuant to 12 U.S.C. 1828(a) for
incorrect display of insurance logo.
Pursuant to section 18(a)(3) of the FDIA
(12 U.S.C. 1828(a)(3)), civil money
penalties may be assessed against an
insured depository institution that fails
to correctly display its insurance logo
pursuant to that section, in an amount
not to exceed $120 for each day the
violation continues.
(9) Civil money penalties assessed
pursuant to 12 U.S.C. 1828(h) for failure
to timely pay assessment—(i) In general.
Subject to paragraph (d)(9)(iii) of this
section, any insured depository
institution that fails or refuses to pay
any assessment shall be subject to a
penalty in an amount of not more than
1 percent of the amount of the
assessment due for each day that such
violation continues.
(ii) Exception in case of dispute.
Paragraph (d)(9)(i) of this section shall
not apply if—
(A) The failure to pay an assessment
is due to a dispute between the insured
depository institution and the
Corporation over the amount of such
assessment; and
(B) The insured depository institution
deposits security satisfactory to the
Corporation for payment upon final
determination of the issue.
(iii) Special rule for small assessment
amounts. If the amount of the
assessment that an insured depository
institution fails or refuses to pay is less
than $10,000 at the time of such failure
or refusal, the amount of any penalty to
which such institution is subject under
paragraph (d)(9)(i) of this section shall
not exceed $120 for each day that such
violation continues.
(iv) Authority to modify or remit
penalty. The Corporation, in the sole
discretion of the Corporation, may
compromise, modify, or remit any
penalty that the Corporation may assess
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or has already assessed under paragraph
(d)(9)(i) of this section upon a finding
that good cause prevented the timely
payment of an assessment.
(10) Civil money penalties assessed
pursuant to 12 U.S.C. 1829b(j) for
recordkeeping violations. Pursuant to
section 19b(j) of the FDIA (12 U.S.C.
1829b(j)), civil money penalties may be
assessed against an insured depository
institution and any director, officer or
employee thereof who willfully or
through gross negligence violates or
causes a violation of the recordkeeping
requirements of that section or its
implementing regulations in an amount
not to exceed $20,111 per violation.
(11) Civil money penalties pursuant to
12 U.S.C. 1832(c) for violation of
provisions regarding interest-bearing
demand deposit accounts. Pursuant to
12 U.S.C. 1832(c), any depository
institution that violates the prohibition
regarding interest-bearing demand
deposit accounts shall be subject to a
fine of $2,795 per violation.
(12) Civil penalties for violations of
security measure requirements under 12
U.S.C. 1884. Pursuant to 12 U.S.C. 1884,
an institution that violates a rule
establishing minimum security
requirements as set forth in 12 U.S.C.
1882, shall be subject to a civil penalty
not to exceed $279 for each day of the
violation.
(13) Civil money penalties assessed
pursuant to 12 U.S.C. 1972(2)(F) for
prohibited tying arrangements. Pursuant
to the Bank Holding Company Act of
1970, Tier One civil money penalties
may be assessed pursuant to 12 U.S.C.
1972(2)(F)(i) in an amount not to exceed
$9,623 for each day during which the
violation continues. Tier Two civil
money penalties may be assessed
pursuant to 12 U.S.C. 1972(2)(F)(ii) in
an amount not to exceed $48,114 for
each day during which the violation,
practice or breach continues. Tier Three
civil money penalties may be assessed
pursuant to 12 U.S.C. 1972(2)(F)(iii) in
an amount not to exceed, in the case of
any person other than an insured
depository institution $1,924,589 for
each day during which the violation,
practice, or breach continues or, in the
case of any insured depository
institution, an amount not to exceed the
lesser of $1,924,589 or 1 percent of the
total assets of such institution for each
day during which the violation,
practice, or breach continues.
(14) Civil money penalties assessed
pursuant to 12 U.S.C. 3909(d). Pursuant
to the International Lending
Supervision Act (ILSA) (12 U.S.C.
3909(d)), civil money penalties may be
assessed against any institution or any
officer, director, employee, agent or
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other person participating in the
conduct of the affairs of such institution
is an amount not to exceed $2,394 for
each day a violation of the ILSA or any
rule, regulation or order issued pursuant
to ILSA continues.
(15) Civil money penalties assessed
for violations of 15 U.S.C. 78u–2.
Pursuant to section 21B of the Securities
Exchange Act of 1934 (Exchange Act)
(15 U.S.C. 78u–2), civil money penalties
may be assessed for violations of certain
provisions of the Exchange Act, where
such penalties are in the public interest.
Tier One civil money penalties may be
assessed pursuant to 15 U.S.C. 78u–
2(b)(1) in an amount not to exceed
$9,054 for a natural person or $90,535
for any other person for violations set
forth in 15 U.S.C. 78u–2(a). Tier Two
civil money penalties may be assessed
pursuant to 15 U.S.C. 78u–2(b)(2) in an
amount not to exceed—for each
violation set forth in 15 U.S.C. 78u–
2(a)—$90,535 for a natural person or
$452,677 for any other person if the act
or omission involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement.
Tier Three civil money penalties may be
assessed pursuant to 15 U.S.C. 78u–
2(b)(3) for each violation set forth in 15
U.S.C. 78u–2(a), in an amount not to
exceed $181,071 for a natural person or
$905,353 for any other person, if the act
or omission involved fraud, deceit,
manipulation, or deliberate or reckless
disregard of a regulatory requirement;
and such act or omission directly or
indirectly resulted in substantial losses,
or created a significant risk of
substantial losses to other persons or
resulted in substantial pecuniary gain to
the person who committed the act or
omission.
(16) Civil money penalties assessed
pursuant to 15 U.S.C. 1639e(k) for
appraisal independence violations.
Pursuant to section 1472(a) of the DoddFrank Wall Street Reform and Consumer
Protection Act (Appraisal Independence
Rule) (15 U.S.C. 1639e(k)), civil money
penalties may be assessed for an initial
violation of the Appraisal Independence
Rule in an amount not to exceed
$11,053 for each day during which the
violation continues and, for subsequent
violations, $22,105 for each day during
which the violation continues.
(17) Civil money penalties assessed
for false claims and statements
pursuant to 31 U.S.C. 3802. Pursuant to
the Program Fraud Civil Remedies Act
(31 U.S.C. 3802), civil money penalties
of not more than $10,957 per claim or
statement may be assessed for violations
involving false claims and statements.
(18) Civil money penalties assessed
for violations of 42 U.S.C. 4012a(f).
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Pursuant to the Flood Disaster
Protection Act (FDPA) (42 U.S.C.
4012a(f)), civil money penalties may be
assessed against any regulated lending
institution that engages in a pattern or
practice of violations of the FDPA in an
amount not to exceed $2,090 per
violation.
Dated at Washington, DC, this 21st day of
December, 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016–31240 Filed 12–27–16; 8:45 am]
BILLING CODE 6714–01–P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 107
RIN 3245–AG67
Small Business Investment
Companies: Passive Business
Expansion and Technical Clarifications
U.S. Small Business
Administration.
ACTION: Final rule.
AGENCY:
The U.S. Small Business
Administration (SBA) is revising the
regulations for the Small Business
Investment Company (SBIC) program to
expand permitted investments in
passive businesses and provide further
clarification with regard to investments
in such businesses. SBICs are generally
prohibited from investing in passive
businesses under the Small Business
Investment Act of 1958, as amended
(Act). SBIC program regulations provide
for two exceptions that allow an SBIC to
structure an investment utilizing a
passive small business as a passthrough. The first exception provides
conditions under which an SBIC may
structure an investment through up to
two levels of passive entities to make an
investment in a non-passive business
that is a subsidiary of the passive
business directly financed by the SBIC.
The second exception, prior to this final
rule, enabled a partnership SBIC, with
SBA’s prior approval, to provide
financing to a small business through a
passive, wholly-owned C corporation
(commonly known as a blocker
corporation), but only if a direct
financing would cause the SBIC’s
investors to incur Unrelated Business
Taxable Income (UBTI). This final rule
clarifies several aspects of the first
exception and in the second exception
eliminates the prior approval
requirement and expands the purposes
for which a blocker corporation may be
SUMMARY:
PO 00000
Frm 00023
Fmt 4700
Sfmt 4700
95419
formed. The final rule also adds new
reporting and other requirements for
passive investments to help protect
SBA’s financial interests and ensure
adequate oversight and makes minor
technical amendments. Finally, this rule
makes a conforming change to the
regulations regarding the amount of
leverage available to SBICs under
common control. This change is
necessary for consistency with the
Consolidated Appropriations Act, 2016,
which increased the maximum amount
of such leverage to $350 million.
DATES: This rule is effective January 27,
2017.
FOR FURTHER INFORMATION CONTACT:
Theresa Jamerson, Office of Investment
and Innovation, (202) 205–7563 or sbic@
sba.gov.
SUPPLEMENTARY INFORMATION:
I. Background Information
The SBIC Program is an SBA
financing program authorized under
Title III of the Small Business
Investment Act of 1958, 15 U.S.C. 681
et seq. Congress created the Small
Business Investment Company (SBIC)
program to ‘‘stimulate and supplement
the flow of private equity capital and
long-term loan funds, which smallbusiness concerns need for the sound
financing of their business operations
and for their growth, expansion, and
modernization, and which are not
available in adequate supply . . . .’’ 15
U.S.C. 661. Congress intended that the
program ‘‘be carried out in such manner
as to insure the maximum participation
of private financing sources.’’ Id. In
accordance with that policy, SBA does
not invest directly in small businesses.
Rather, through the SBIC Program, SBA
licenses and provides debenture
leverage (Leverage) to SBICs. SBICs are
privately-owned and professionally
managed for-profit investment funds
that make loans to, and investments in,
qualified small businesses using a
combination of privately raised capital
and Leverage guaranteed by SBA. SBA
will guarantee the repayment of
debentures issued by an SBIC based on
the amount of qualifying private capital
raised by an SBIC up to a maximum
amount of $150 million in Leverage.
SBICs are generally prohibited from
investing in passive businesses under
the Small Business Investment Act of
1958. Prior to this final rule, the SBIC
program regulations provided for the
following two exceptions that allowed
an SBIC to structure an investment
utilizing a passive small business as a
pass-through:
A. ‘‘Holding company exception’’—
§ 107.720(b)(2): This exception provides
E:\FR\FM\28DER1.SGM
28DER1
]]>Agencies
[Federal Register Volume 81, Number 249 (Wednesday, December 28, 2016)]
[Rules and Regulations]
[Pages 95412-95419]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-31240]
=======================================================================
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 308
RIN 3064-AE52
Rules of Practice and Procedure
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is adjusting
the maximum amount of each civil money penalty (CMP) within its
jurisdiction to account for inflation. This action is required by the
Federal Civil Penalties Inflation Adjustment Act Improvements Act of
2015 (2015 Adjustment Act). The FDIC is also amending its rules of
practice and procedure to correct a technical error from the previous
inflation-adjustment rulemaking.
DATES: This rule is effective on January 15, 2017.
FOR FURTHER INFORMATION CONTACT: Seth P. Rosebrock, Supervisory
Counsel, Legal Division (202) 898-6609, or Graham N. Rehrig, Senior
Attorney, Legal Division (202) 898-3829.
SUPPLEMENTARY INFORMATION:
I. Policy Objectives
The Final Rule changes the maximum limit for CMPs according to
inflation as mandated by Congress in the 2015 Adjustment Act.\1\ The
intended effect of annually adjusting maximum civil money penalties in
accordance with changes in the Consumer Price Index is
[[Page 95413]]
to minimize any distortion in the real value of those maximums due to
inflation, thereby promoting a more consistent deterrent effect in the
structure of CMPs. The Final Rule also amends the FDIC's rules of
practice and procedure under 12 CFR part 308 to remove a technical
error found at 12 CFR 308.132(c).
---------------------------------------------------------------------------
\1\ Public Law 114-74, sec. 701, 129 Stat. 584.
---------------------------------------------------------------------------
II. Background
The FDIC assesses CMPs under section 8(i) of the Federal Deposit
Insurance Act (FDIA), 12 U.S.C. 1818, and a variety of other
statutes.\2\ Congress established maximum penalties that could be
assessed under these statutes. In many cases, these statutes contain
multiple penalty tiers, permitting the assessment of penalties at
various levels depending upon the severity of the misconduct at
issue.\3\
---------------------------------------------------------------------------
\2\ See, e.g., 12 U.S.C. 1972(2)(F) (authorizing the FDIC to
impose CMPs for violations of the Bank Holding Company Act of 1970
related to prohibited tying arrangements); 15 U.S.C. 78u-2
(authorizing the FDIC to impose CMPs for violations of certain
provisions of the Securities Exchange Act of 1934); 42 U.S.C.
4012a(f) (authorizing the FDIC to impose CMPs for pattern or
practice violations of the Flood Disaster Protection Act).
\3\ For example, Section 8(i)(2) of the FDIA, 12 U.S.C.
1818(i)(2), provides for three tiers of CMPs, with the size of such
CMPs increasing with the gravity of the misconduct.
---------------------------------------------------------------------------
In 1990, Congress determined that the assessment of CMPs plays ``an
important role in deterring violations and furthering the policy goals
embodied in such laws and regulations'' and concluded that ``the impact
of many civil monetary penalties has been and is diminished due to the
effect of inflation.'' \4\ Consequently, Congress required federal
agencies with authority to impose CMPs to periodically adjust by
rulemaking the maximum CMPs which these agencies were authorized to
impose in order to ``maintain the deterrent effect of civil monetary
penalties and promote compliance with the law.'' \5\ Under the 1990
Adjustment Act, the FDIC adjusted its CMP amounts every four years.\6\
---------------------------------------------------------------------------
\4\ Section 2 of the Federal Civil Penalties Inflation
Adjustment Act of 1990 (1990 Adjustment Act). Public Law 101-410,
104 Stat. 890 (amended 2015) (codified as amended at 28 U.S.C. 2461
note).
\5\ Id.
\6\ See, e.g., 77 FR 74573 (Dec. 17, 2012).
---------------------------------------------------------------------------
In 2015, Congress revised the process by which federal agencies
adjust applicable CMPs for inflation.\7\ Under the 2015 Adjustment Act,
the FDIC is required to (1) adjust the CMP levels with an initial
catch-up adjustment through an interim final rulemaking and (2) make
subsequent annual adjustments for inflation.\8\ The initial and
subsequent adjustments apply to all CMPs covered by the 2015 Adjustment
Act.\9\ The FDIC published its interim final rulemaking--containing the
initial catch-up adjustments--on June 29, 2016.\10\ The 2015 Adjustment
Act requires subsequent annual adjustments to be made by January 15 of
each year.\11\
---------------------------------------------------------------------------
\7\ See Public Law 114-74, sec. 701, 129 Stat. 584.
\8\ See id. at sec. 701(b).
\9\ See Public Law 101-410, sec. 3(2), 104 Stat. 890 (amended
2015) (codified as amended at 28 U.S.C. 2461 note).
\10\ 81 FR 42235. Although the FDIC was not obligated to solicit
comments for the interim final rule, the FDIC asked for comments
from the public and received one comment. See https://www.fdic.gov/regulations/laws/federal/2016/2016_rules_of_practice_and_procedure_3064%E2%80%93AE43.html. The
comment noted that the FDIC interim final rule was issued according
to a statutory mandate, but expressed disappointment that the FDIC
``did not promulgate [its] interim final CMP rules pursuant to the
normal administrative process, whereby interested stakeholders among
the public have an opportunity to comment on a `Proposed Rule'
before it is finalized.'' Id. The commenter made no specific request
that the final rule be amended or changed, however, but requested
that the FDIC exercise its ``discretion to impose CMP amounts below
the maximum level in accordance with the severity of the misconduct
at issue.'' Id. As noted above, the FDIC followed an explicit
statutory mandate in creating the interim final rule. Moreover, the
FDIC intends to continue to exercise its discretion--in accordance
with statutory requirements--in imposing appropriate CMP amounts.
See 12 U.S.C. 1818(i)(2)(G).
\11\ Public Law 114-74, sec. 701(b), 129 Stat. 584.
---------------------------------------------------------------------------
Although the 2015 Adjustment Act increases the maximum penalty that
may be assessed under each applicable statute, the FDIC possesses
discretion to impose CMP amounts below the maximum level in accordance
with the severity of the misconduct at issue. When making a
determination as to the appropriate level of any given penalty, the
FDIC is guided by statutory factors set forth in section 8(i)(2)(G) of
the FDIA, 12 U.S.C. 1818(i)(2)(G), and those factors identified in the
Interagency Policy Statement Regarding the Assessment of CMPs by the
Federal Financial Institutions Regulatory Agencies.\12\ Such factors
include, but are not limited to, the gravity and duration of the
misconduct, and the intent related to the misconduct.
---------------------------------------------------------------------------
\12\ 63 FR 30227 (June 3, 1998).
---------------------------------------------------------------------------
While the 2015 Adjustment Act required the FDIC to initially adjust
its maximum CMP amounts through an interim final rulemaking, for
subsequent adjustments, the FDIC ``shall adjust [CMPs] and shall make
the adjustment notwithstanding section 553 of title 5, United States
Code'' (the Administrative Procedure Act).\13\ The FDIC, therefore, is
not obligated to publish the subsequent adjustments through notice-and-
comment rulemaking, and the FDIC is publishing the adjustments through
a final rule.
---------------------------------------------------------------------------
\13\ Public Law 114-74, sec. 701(b), 129 Stat. 584 (emphasis
added).
---------------------------------------------------------------------------
Moreover, the FDIC is correcting a technical error found at 12 CFR
308.132(c). During the last CMP-adjustment process, the FDIC sought to
revise 12 CFR 308.132(c) to articulate the FDIC Board's authority to
assess CMPs. The FDIC also intended to transfer the substance of
current 12 CFR 308.132(c)(2) through 12 CFR 308.132(c)(3)(xvii) to
current 12 CFR 308.132(d), and to remove the now-duplicative language
of 12 CFR 308.132(c)(2) through 12 CFR 308.132(c)(3)(xvii). The Final
Rule amends 12 CFR 308.132(c) accordingly by removing 12 CFR
308.132(c)(2) through 12 CFR 308.132(c)(3)(xvii) and retitling current
12 CFR 308.132(c)(1).
The FDIC believes that all of these changes are technical and
ministerial in character, and therefore, the FDIC is not soliciting
public comment on the changes.
III. Description and Expected Effects of the Final Rule
The Final Rule modifies the maximum limit for CMPs according to
inflation as mandated by Congress in the 2015 Adjustment Act. The 2015
Adjustment Act directs federal agencies to follow guidance issued by
the Office of Management and Budget (OMB) on December 16, 2016 (OMB
Guidance), when calculating new maximum penalty levels.\14\ The
adjustments are to be based on the percent change between the Consumer
Price Index for all Urban Consumers (CPI-U) \15\ for October 2015 and
the October 2016 CPI-U.
---------------------------------------------------------------------------
\14\ See OMB, Implementation of the 2017 Annual Adjustment
Pursuant to the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015, M-17-11 (Dec. 16, 2016), available at
https://www.whitehouse.gov/sites/default/files/omb/memoranda/2017/m-17-11_0.pdf (noting that the applicable 2017 CMP-adjustment
multiplier is 1.01636).
\15\ The CPI-U is compiled by the Bureau of Statistics of the
Department of Labor.
---------------------------------------------------------------------------
Summary of the FDIC's Calculations
In keeping with the OMB Guidance, the FDIC multiplied each of its
CMP amounts by the relevant inflation factor.\16\ After applying the
multiplier, the FDIC rounded each penalty level to the nearest dollar.
In making these calculations, the FDIC consulted with staff from the
Office of the Comptroller of the Currency, the Board of Governors for
the Federal Reserve System, the National Credit Union Administration,
[[Page 95414]]
and the Bureau of Consumer Financial Protection to ensure that the
FDIC's calculations and adjustments are consistent with those being
proposed by other federal financial regulators for the same statutes.
---------------------------------------------------------------------------
\16\ Under the 1990 Adjustment Act, adjustments have been made
only to CMPs that are for specific dollar amounts or maximums. CMPs
that are assessed based upon a fixed percentage of an institution's
total assets are not subject to adjustment.
---------------------------------------------------------------------------
The Adjusted CMP Amounts
The following chart displays the adjusted CMP amounts for each CMP
identified in 12 CFR part 308.\17\ The following chart reflects the
maximum CMP amounts that may be assessed after January 15, 2017--the
effective date of the 2017 annual adjustment--including assessments
whose associated violations occurred on or after November 2, 2015.\18\
---------------------------------------------------------------------------
\17\ As noted previously, the FDIC retains discretion to impose
CMPs in amounts below the referenced maximums.
\18\ See OMB Guidance at 4.
Maximum Civil Money Penalty Amounts
------------------------------------------------------------------------
Current maximum Adjusted maximum
U.S. Code citation CMP (through CMP (beginning
January 14, 2017) January 15, 2017)
------------------------------------------------------------------------
12 U.S.C. 1464(v)
Tier One CMP................ $3,787 $3,849
Tier Two CMP................ 37,872 38,492
Tier Three CMP.............. 1,893,610 1,924,589
12 U.S.C. 1467(d)............... 9,468 9,623
12 U.S.C. 1817(a)
Tier One CMP................ 3,787 3,849
Tier Two CMP................ 37,872 38,492
Tier Three CMP.............. 1,893,610 1,924,589
12 U.S.C. 1817(c)
Tier One CMP................ 3,462 3,519
Tier Two CMP................ 34,620 35,186
Tier Three CMP.............. 1,730,990 1,759,309
12 U.S.C. 1818(i)(2)
Tier One CMP................ 9,468 9,623
Tier Two CMP................ 47,340 48,114
Tier Three CMP.............. 1,893,610 1,924,589
12 U.S.C. 1820(e)(4)............ 8,655 8,797
12 U.S.C. 1820(k)(6)............ 311,470 316,566
12 U.S.C. 1828(a)(3)............ 118 120
12 U.S.C. 1828(h)
For assessments < 10,000.... 118 120
12 U.S.C. 1829b(j).............. 19,787 20,111
12 U.S.C. 1832(c)............... 2,750 2,795
12 U.S.C. 1884.................. 275 279
12 U.S.C. 1972(2)(F)
Tier One CMP................ 9,468 9,623
Tier Two CMP................ 47,340 48,114
Tier Three CMP.............. 1,893,610 1,924,589
12 U.S.C. 3909(d)............... 2,355 2,394
15 U.S.C. 78u-2
Tier One CMP (individuals).. 8,908 9,054
Tier One CMP (others)....... 89,078 90,535
Tier Two CMP (individuals).. 89,078 90,535
Tier Two CMP (others)....... 445,390 452,677
Tier Three CMP (individuals) 178,156 181,071
Tier Three penalty (others). 890,780 905,353
15 U.S.C. 1639e(k)
First violation............. 10,875 11,053
Subsequent violations....... 21,749 22,105
31 U.S.C. 3802.................. 10,781 10,957
42 U.S.C. 4012a(f).............. 2,056 2,090
------------------------------------------------------------------------
------------------------------------------------------------------------
Current maximum New maximum amount
CFR citation amount (through (beginning January
January 14, 2017) 15, 2017)
------------------------------------------------------------------------
12 CFR 308.132(c)--Late or
Misleading Reports of Condition
and Income (Call Reports)
First Offense
25 million or more assets
1 to 15 days late....... $519 $527
16 or more days late.... 1,039 1,056
Less than 25 million assets
1 to 15 days late....... 173 176
16 or more days late.... 346 352
[[Page 95415]]
Subsequent Offenses
25 million or more assets
1 to 15 days late....... 865 879
16 or more days late.... 1,731 1,759
------------------------------------------------------------------------
The Expected Effects of the CMP Adjustments
The CMP Adjustments are expected to more precisely adjust CMP
maximums relative to inflation. These adjustments are expected to
minimize any year-to-year distortions in the real value of the CMP
maximums. These adjustments will promote a more consistent deterrent
effect in the structure of CMPs. As previously noted, the FDIC retains
discretion to impose CMP amounts below the maximum level. The actual
number and size of CMPs assessed in the future will depend on the
propensity and severity of the violations committed by banks and
institution-affiliated parties, as well as the particular statute that
is at issue. Such future violations cannot be reliably forecast. It is
expected that the FDIC will continue to exercise its discretion to
impose CMPs that are appropriate to their severity.
The 2015 Adjustment Act will likely result in a minimal increase in
administrative costs for the FDIC in order to establish new inflation-
adjusted maximum CMPs each year. Because these calculations are
relatively simple, the number of labor hours necessary to perform this
task is likely to be insignificant relative to total enforcement labor
hours for the Corporation.
IV. Alternatives Considered
The 2015 Adjustment Act mandates the frequency of the inflation
adjustment and the measure of inflation to be used in making these
adjustments. This statute also provides that the FDIC is not required
to proceed through notice-and-comment rulemaking under the
Administrative Procedure Act in making annual CMP adjustments.
Therefore, the FDIC has not considered alternatives to the CMP
Adjustments.
V. Request for Comment
The 2015 Adjustment Act requires the FDIC to adjust its maximum CMP
amounts ``notwithstanding section 553 of title 5, United States Code,''
\19\ and provides the specific adjustments to be made. Moreover, the
CMP Adjustments and the revisions to the CFR are ministerial and
technical; therefore, the FDIC is not required to complete a notice-
and-comment rulemaking process prior to making the adjustments.
---------------------------------------------------------------------------
\19\ Public Law 114-74, sec. 701(b), 129 Stat. 584.
---------------------------------------------------------------------------
VI. Regulatory Analysis
Riegle Community Development and Regulatory Improvement Act
Section 302 of the Riegle Community Development and Regulatory
Improvement Act \20\ generally requires that regulations prescribed by
federal banking agencies which impose additional reporting,
disclosures, or other new requirements on insured depository
institutions take effect on the first day of a calendar quarter unless
the regulation is required to take effect on another date pursuant to
another act of Congress or the agency determines for good cause that
the regulation should become effective on an earlier date.
---------------------------------------------------------------------------
\20\ 12 U.S.C. 4802.
---------------------------------------------------------------------------
This Final Rule does not impose any new or additional reporting,
disclosures, or other requirements on insured depository institutions.
Therefore, the Final Rule is not subject to the requirements of this
statute.
Regulatory Flexibility Act
An initial regulatory flexibility analysis under the Regulatory
Flexibility Act \21\ (RFA) is required only when an agency must publish
a general notice of proposed rulemaking. As noted above, the FDIC
determined that publication of a notice of proposed rulemaking is not
necessary for the Final Rule. Accordingly, the RFA does not require an
initial regulatory flexibility analysis. Nevertheless, the FDIC
considered the likely impact of Final Rule on small entities. From 2011
through 2015, on average, only 1.6 percent of FDIC-supervised
institutions were ordered to pay a CMP each year. Accordingly, the FDIC
believes that the Final Rule will not have a significant impact on a
substantial number of small entities.
---------------------------------------------------------------------------
\21\ 5 U.S.C. 603.
---------------------------------------------------------------------------
Small Business Regulatory Enforcement Fairness Act
The OMB has determined that the Final Rule is not a ``major rule''
within the meaning of the relevant sections of the Small Business
Regulatory Enforcement Act of 1996 (SBREFA).\22\ As required by SBREFA,
the FDIC will submit the Final Rule and other appropriate reports to
Congress and the Government Accountability Office for review.
---------------------------------------------------------------------------
\22\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------
The Omnibus Consolidated and Emergency Supplemental Appropriations Act,
1999: Assessment of Federal Regulations and Policies on Families
The FDIC determined that the Final Rule will not affect family
wellbeing within the meaning of section 654 of the Omnibus Consolidated
and Emergency Supplemental Appropriations Act, 1999.\23\
---------------------------------------------------------------------------
\23\ Public Law 105-277, 112 Stat. 2681 (1998).
---------------------------------------------------------------------------
Paperwork Reduction Act
The Final Rule does not create any new, or revise any existing,
collections of information under section 3504(h) of the Paperwork
Reduction Act of 1980.\24\ Consequently, no information collection
request will be submitted to the OMB for review.
---------------------------------------------------------------------------
\24\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
Plain Language Act
Section 722 of the Gramm-Leach-Bliley Act requires the FDIC to use
plain language in all proposed and final rules published after January
1, 2000.\25\ Accordingly, the FDIC has attempted to write the Final
Rule in clear and comprehensible language.
---------------------------------------------------------------------------
\25\ Public Law 106-102, 113 Stat. 1338 (Nov. 12, 1999).
---------------------------------------------------------------------------
List of Subjects in 12 CFR Part 308
Administrative practice and procedure, Banks, Banking, Claims,
Crime, Equal access to justice, Ex parte communications, Hearing
procedure, Lawyers, Penalties, State nonmember banks.
[[Page 95416]]
For the reasons set forth in the preamble, the FDIC amends 12 CFR
part 308 as follows:
PART 308--RULES OF PRACTICE AND PROCEDURE
0
1. The authority citation for part 308 continues to read as follows:
Authority: 5 U.S.C. 504, 554-557; 12 U.S.C. 93(b), 164, 505,
1464, 1467(d), 1467a, 1468, 1815(e), 1817, 1818, 1819, 1820, 1828,
1829, 1829(b), 1831i, 1831m(g)(4), 1831o, 1831p-1, 1832(c), 1884(b),
1972, 3102, 3108(a), 3349, 3909, 4717, 5412(b)(2)(C), 5414(b)(3); 15
U.S.C. 78(h) and (i), 78o(c)(4), 78o-4(c), 78o-5, 78q-1, 78s, 78u,
78u-2, 78u-3, 78w, 6801(b), 6805(b)(1); 28 U.S.C. 2461 note; 31
U.S.C. 330, 5321; 42 U.S.C. 4012a; Pub. L. 104-134, sec. 31001(s),
110 Stat. 1321; Pub. L. 109-351, 120 Stat. 1966; Pub. L. 111-203,
124 Stat. 1376; Pub. L. 114-74, sec. 701, 129 Stat. 584.
0
2. Revise Sec. 308.116(b)(4) to read as follows:
Sec. 308.116 Assessment of penalties.
* * * * *
(b) * * *
(4) Adjustment of civil money penalties by the rate of inflation
pursuant to the Federal Civil Penalties Inflation Adjustment Act
Improvements Act of 2015. After January 15, 2017, for violations that
occurred on or after November 2, 2015:
(i) Any person who has engaged in a violation as set forth in
paragraph (b)(1) of this section shall forfeit and pay a civil money
penalty of not more than $9,623 for each day the violation continued.
(ii) Any person who has engaged in a violation, unsafe or unsound
practice or breach of fiduciary duty, as set forth in paragraph (b)(2)
of this section, shall forfeit and pay a civil money penalty of not
more than $48,114 for each day such violation, practice or breach
continued.
(iii) Any person who has knowingly engaged in a violation, unsafe
or unsound practice or breach of fiduciary duty, as set forth in
paragraph (b)(3) of this section, shall forfeit and pay a civil money
penalty not to exceed:
(A) In the case of a person other than a depository institution--
$1,924,589 per day for each day the violation, practice or breach
continued; or
(B) In the case of a depository institution--an amount not to
exceed the lesser of $1,924,589 or one percent of the total assets of
such institution for each day the violation, practice or breach
continued.
* * * * *
0
3. Revise Sec. 308.132(c) and (d) to read as follows:
Sec. 308.132 Assessment of penalties.
* * * * *
(c) Authority of the Board of Directors. The Board of Directors or
its designee may assess civil money penalties under section 8(i) of the
FDIA (12 U.S.C. 1818(i)), and Sec. 308.1(e) of the Uniform Rules (this
part).
(d) Maximum civil money penalty amounts. Pursuant to the Federal
Civil Penalties Inflation Adjustment Act Improvements Act of 2015,
after January 15, 2017, for violations that occurred on or after
November 2, 2015, the Board of Directors or its designee may assess
civil money penalties in the maximum amounts as follows:
(1) Civil money penalties assessed pursuant to 12 U.S.C. 1464(v)
for late filing or the submission of false or misleading certified
statements by State savings associations. Pursuant to section 5(v) of
the Home Owners' Loan Act (12 U.S.C. 1464(v)), the Board of Directors
or its designee may assess civil money penalties as follows:
(i) Late filing--Tier One penalties. In cases in which an
institution fails to make or publish its Report of Condition and Income
(Call Report) within the appropriate time periods, a civil money
penalty of not more than $3,849 per day may be assessed where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the late filing occurred unintentionally and as a
result of such error; or the institution inadvertently transmitted a
Call Report that is minimally late. For penalties assessed after
January 15, 2017, for violations of this paragraph (d)(3)(i) that
occurred on or after November 2, 2015, the following maximum Tier One
penalty amounts contained in paragraphs (d)(1)(i)(A) and (B) of this
section shall apply for each day that the violation continues.
(A) First offense. Generally, in such cases, the amount assessed
shall be $527 per day for each of the first 15 days for which the
failure continues, and $1,056 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, the amount assessed shall be the
greater of $176 per day or 1/1000th of the institution's total assets
(1/10th of a basis point) for each of the first 15 days for which the
failure continues, and $352 or 1/500th of the institution's total
assets, \1/5\ of a basis point) for each subsequent day the failure
continues, beginning on the sixteenth day.
(B) Subsequent offense. Where the institution has been delinquent
in making or publishing its Call Report within the preceding five
quarters, the amount assessed for the most current failure shall
generally be $879 per day for each of the first 15 days for which the
failure continues, and $1,759 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, those amounts, respectively,
shall be 1/500th of the bank's total assets and 1/250th of the
institution's total assets.
(C) Lengthy or repeated violations. The amounts set forth in this
paragraph (d)(1)(i) will be assessed on a case by case basis where the
amount of time of the institution's delinquency is lengthy or the
institution has been delinquent repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary circumstances outside the control
of the institution, penalties assessed for late filing shall not be
waived.
(ii) Late-filing--Tier Two penalties. Where an institution fails to
make or publish its Call Report within the appropriate time period, the
Board of Directors or its designee may assess a civil money penalty of
not more than $38,492 per day for each day the failure continues.
(iii) False or misleading reports or information--(A) Tier One
penalties. In cases in which an institution submits or publishes any
false or misleading Call Report or information, the Board of Directors
or its designee may assess a civil money penalty of not more than
$3,849 per day for each day the information is not corrected, where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the violation occurred unintentionally and as a
result of such error; or the institution inadvertently transmits a Call
Report or information that is false or misleading.
(B) Tier Two penalties. Where an institution submits or publishes
any false or misleading Call Report or other information, the Board of
Directors or its designee may assess a civil money penalty of not more
than $38,492 per day for each day the information is not corrected.
(C) Tier Three penalties. Where an institution knowingly or with
reckless disregard for the accuracy of any Call Report or information
submits or publishes any false or misleading Call Report or other
information, the Board of Directors or its designee may assess a civil
money penalty of not more than the lesser of $1,924,589 or 1 percent of
the institution's total assets per day for each day the information is
not corrected.
(iv) Mitigating factors. The amounts set forth in this paragraph
(d)(1) may be
[[Page 95417]]
reduced based upon the factors set forth in paragraph (b) of this
section.
(2) Civil money penalties assessed pursuant to 12 U.S.C. 1467(d)
for refusal by an affiliate of a State savings association to allow
examination or to provide required information during an examination.
Pursuant to section 9(d) of the Home Owners' Loan Act (12 U.S.C.
1467(d)), civil money penalties may be assessed against any State
savings association if an affiliate of such an institution refuses to
permit a duly-appointed examiner to conduct an examination or refuses
to provide information during the course of an examination as set forth
12 U.S.C. 1467(d), in an amount not to exceed $9,623 for each day the
refusal continues.
(3) Civil money penalties assessed pursuant to 12 U.S.C. 1817(a)
for late filings or the submission of false or misleading reports of
condition. Pursuant to section 7(a) of the FDIA (12 U.S.C. 1817(a)),
the Board of Directors or its designee may assess civil money penalties
as follows:
(i) Late filing--Tier One penalties. In cases in which an
institution fails to make or publish its Report of Condition and Income
(Call Report) within the appropriate time periods, a civil money
penalty of not more than $3,849 per day may be assessed where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the late filing occurred unintentionally and as a
result of such error; or the institution inadvertently transmitted a
Call Report that is minimally late. For penalties assessed after
January 15, 2017, for violations of this paragraph (d)(3)(i) that
occurred on or after November 2, 2015, the following maximum Tier One
penalty amounts contained in paragraphs (d)(3)(i)(A) and (B) of this
section shall apply for each day that the violation continues.
(A) First offense. Generally, in such cases, the amount assessed
shall be $527 per day for each of the first 15 days for which the
failure continues, and $1,056 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, the amount assessed shall be the
greater of $176 per day or 1/1000th of the institution's total assets
(1/10th of a basis point) for each of the first 15 days for which the
failure continues, and $352 or 1/500th of the institution's total
assets, (\1/5\ of a basis point) for each subsequent day the failure
continues, beginning on the sixteenth day.
(B) Subsequent offense. Where the institution has been delinquent
in making or publishing its Call Report within the preceding five
quarters, the amount assessed for the most current failure shall
generally be $879 per day for each of the first 15 days for which the
failure continues, and $1,759 per day for each subsequent day the
failure continues, beginning on the sixteenth day. For institutions
with less than $25,000,000 in assets, those amounts, respectively,
shall be 1/500th of the bank's total assets and 1/250th of the
institution's total assets.
(C) Lengthy or repeated violations. The amounts set forth in this
paragraph (d)(3)(i) will be assessed on a case by case basis where the
amount of time of the institution's delinquency is lengthy or the
institution has been delinquent repeatedly in making or publishing its
Call Reports.
(D) Waiver. Absent extraordinary circumstances outside the control
of the institution, penalties assessed for late filing shall not be
waived.
(ii) Late-filing--Tier Two penalties. Where an institution fails to
make or publish its Call Report within the appropriate time period, the
Board of Directors or its designee may assess a civil money penalty of
not more than $38,492 per day for each day the failure continues.
(iii) False or misleading reports or information--(A) Tier One
penalties. In cases in which an institution submits or publishes any
false or misleading Call Report or information, the Board of Directors
or its designee may assess a civil money penalty of not more than
$3,849 per day for each day the information is not corrected, where the
institution maintains procedures in place reasonably adapted to avoid
inadvertent error and the violation occurred unintentionally and as a
result of such error; or the institution inadvertently transmits a Call
Report or information that is false or misleading.
(B) Tier Two penalties. Where an institution submits or publishes
any false or misleading Call Report or other information, the Board of
Directors or its designee may assess a civil money penalty of not more
than $38,492 per day for each day the information is not corrected.
(C) Tier Three penalties. Where an institution knowingly or with
reckless disregard for the accuracy of any Call Report or information
submits or publishes any false or misleading Call Report or other
information, the Board of Directors or its designee may assess a civil
money penalty of not more than the lesser of $1,924,589 or 1 percent of
the institution's total assets per day for each day the information is
not corrected.
(iv) Mitigating factors. The amounts set forth in this paragraph
(d)(3) may be reduced based upon the factors set forth in paragraph (b)
of this section.
(4) Civil money penalties assessed pursuant to 12 U.S.C. 1817(c)
for late filing or the submission of false or misleading certified
statements. Tier One civil money penalties may be assessed pursuant to
section 7(c)(4)(A) of the FDIA (12 U.S.C. 1817(c)(4)(A)) in an amount
not to exceed $3,519 for each day during which the failure to file
continues or the false or misleading information is not corrected. Tier
Two civil money penalties may be assessed pursuant to section
7(c)(4)(B) of the FDIA (12 U.S.C. 1817(c)(4)(B)) in an amount not to
exceed $35,186 for each day during which the failure to file continues
or the false or misleading information is not corrected. Tier Three
civil money penalties may be assessed pursuant to section 7(c)(4)(C) in
an amount not to exceed the lesser of $1,759,309 or 1 percent of the
total assets of the institution for each day during which the failure
to file continues or the false or misleading information is not
corrected.
(5) Civil money penalties assessed pursuant to section 8(i)(2) of
the FDIA. Tier One civil money penalties may be assessed pursuant to
section 8(i)(2)(A) of the FDIA (12 U.S.C. 1818(i)(2)(A)) in an amount
not to exceed $9,623 for each day during which the violation continues.
Tier Two civil money penalties may be assessed pursuant to section
8(i)(2)(B) of the FDIA (12 U.S.C. 1818(i)(2)(B)) in an amount not to
exceed $48,114 for each day during which the violation, practice or
breach continues. Tier Three civil money penalties may be assessed
pursuant to section 8(i)(2)(C) (12 U.S.C. 1818(i)(2)(C)) in an amount
not to exceed, in the case of any person other than an insured
depository institution $1,924,589 or, in the case of any insured
depository institution, an amount not to exceed the lesser of
$1,924,589 or 1 percent of the total assets of such institution for
each day during which the violation, practice, or breach continues.
(i) Pursuant to 7(j)(16) of the FDIA (12 U.S.C. 1817(j)(16)), a
civil money penalty may be assessed for violations of change in control
of insured depository institution provisions pursuant to section
8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)) in the amounts set forth in
this paragraph (d)(5).
(ii) Pursuant to the International Banking Act of 1978 (IBA) (12
U.S.C. 3108(b)), civil money penalties may be assessed for failure to
comply with the requirements of the IBA pursuant to
[[Page 95418]]
section 8(i)(2) of the FDIA (12 U.S.C. 1818(i)(2)), in the amounts set
forth in this paragraph (d)(5).
(iii) Pursuant to section 1120(b) of the Financial Institutions
Recovery, Reform, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.
3349(b)), where a financial institution seeks, obtains, or gives any
other thing of value in exchange for the performance of an appraisal by
a person that the institution knows is not a state certified or
licensed appraiser in connection with a federally related transaction,
a civil money penalty may be assessed pursuant to section 8(i)(2) of
the FDIA (12 U.S.C. 1818(i)(2)) in the amounts set forth in this
paragraph (d)(5).
(iv) Pursuant to the Community Development Banking and Financial
Institution Act (Community Development Banking Act) (12 U.S.C. 4717(b))
a civil money penalty may be assessed for violations of the Community
Development Banking Act pursuant to section 8(i)(2) of the FDIA (12
U.S.C. 1818(i)(2)), in the amount set forth in this paragraph (d)(5).
(v) Civil money penalties may be assessed pursuant to section
8(i)(2) of the FDIA in the amounts set forth in this paragraph (d)(5)
for violations of various consumer laws, including, but not limited to,
the Home Mortgage Disclosure Act (12 U.S.C. 2804 et seq. and 12 CFR
203.6), the Expedited Funds Availability Act (12 U.S.C. 4001 et seq.),
the Truth in Savings Act (12 U.S.C. 4301 et seq.), the Real Estate
Settlement Procedures Act (12 U.S.C. 2601 et seq.), the Truth in
Lending Act (15 U.S.C. 1601 et seq.), the Fair Credit Reporting Act (15
U.S.C. 1681 et seq.), the Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.), the Fair Debt Collection Practices Act (15 U.S.C. 1692 et
seq.), the Electronic Funds Transfer Act (15 U.S.C. 1693 et seq.) and
the Fair Housing Act (42 U.S.C. 3601 et seq.).
(6) Civil money penalties assessed pursuant to 12 U.S.C. 1820(e)
for refusal to allow examination or to provide required information
during an examination. Pursuant to section 10(e)(4) of the FDIA (12
U.S.C. 1820(e)(4)), civil money penalties may be assessed against any
affiliate of an insured depository institution that refuses to permit a
duly-appointed examiner to conduct an examination or to provide
information during the course of an examination as set forth in section
20(b) of the FDIA (12 U.S.C. 1820(b)), in an amount not to exceed
$8,797 for each day the refusal continues.
(7) Civil money penalties assessed pursuant to 12 U.S.C. 1820(k)
for violation of one-year restriction on Federal examiners of financial
institutions. Pursuant to section 10(k) of the FDIA (12 U.S.C.
1820(k)), the Board of Directors or its designee may assess a civil
money penalty of up to $316,566 against any covered former Federal
examiner of a financial institution who, in violation of section 10(k)
of the FDIA (12 U.S.C. 1820(k)) and within the one-year period
following termination of government service as an employee, serves as
an officer, director, or consultant of a financial or depository
institution, a holding company, or of any other entity listed in
section 10(k) of the FDIA (12 U.S.C. 1820(k)), without the written
waiver or permission by the appropriate Federal banking agency or
authority under section 10(k)(5) of the FDIA (12 U.S.C. 1820(k)(5)).
(8) Civil money penalties assessed pursuant to 12 U.S.C. 1828(a)
for incorrect display of insurance logo. Pursuant to section 18(a)(3)
of the FDIA (12 U.S.C. 1828(a)(3)), civil money penalties may be
assessed against an insured depository institution that fails to
correctly display its insurance logo pursuant to that section, in an
amount not to exceed $120 for each day the violation continues.
(9) Civil money penalties assessed pursuant to 12 U.S.C. 1828(h)
for failure to timely pay assessment--(i) In general. Subject to
paragraph (d)(9)(iii) of this section, any insured depository
institution that fails or refuses to pay any assessment shall be
subject to a penalty in an amount of not more than 1 percent of the
amount of the assessment due for each day that such violation
continues.
(ii) Exception in case of dispute. Paragraph (d)(9)(i) of this
section shall not apply if--
(A) The failure to pay an assessment is due to a dispute between
the insured depository institution and the Corporation over the amount
of such assessment; and
(B) The insured depository institution deposits security
satisfactory to the Corporation for payment upon final determination of
the issue.
(iii) Special rule for small assessment amounts. If the amount of
the assessment that an insured depository institution fails or refuses
to pay is less than $10,000 at the time of such failure or refusal, the
amount of any penalty to which such institution is subject under
paragraph (d)(9)(i) of this section shall not exceed $120 for each day
that such violation continues.
(iv) Authority to modify or remit penalty. The Corporation, in the
sole discretion of the Corporation, may compromise, modify, or remit
any penalty that the Corporation may assess or has already assessed
under paragraph (d)(9)(i) of this section upon a finding that good
cause prevented the timely payment of an assessment.
(10) Civil money penalties assessed pursuant to 12 U.S.C. 1829b(j)
for recordkeeping violations. Pursuant to section 19b(j) of the FDIA
(12 U.S.C. 1829b(j)), civil money penalties may be assessed against an
insured depository institution and any director, officer or employee
thereof who willfully or through gross negligence violates or causes a
violation of the recordkeeping requirements of that section or its
implementing regulations in an amount not to exceed $20,111 per
violation.
(11) Civil money penalties pursuant to 12 U.S.C. 1832(c) for
violation of provisions regarding interest-bearing demand deposit
accounts. Pursuant to 12 U.S.C. 1832(c), any depository institution
that violates the prohibition regarding interest-bearing demand deposit
accounts shall be subject to a fine of $2,795 per violation.
(12) Civil penalties for violations of security measure
requirements under 12 U.S.C. 1884. Pursuant to 12 U.S.C. 1884, an
institution that violates a rule establishing minimum security
requirements as set forth in 12 U.S.C. 1882, shall be subject to a
civil penalty not to exceed $279 for each day of the violation.
(13) Civil money penalties assessed pursuant to 12 U.S.C.
1972(2)(F) for prohibited tying arrangements. Pursuant to the Bank
Holding Company Act of 1970, Tier One civil money penalties may be
assessed pursuant to 12 U.S.C. 1972(2)(F)(i) in an amount not to exceed
$9,623 for each day during which the violation continues. Tier Two
civil money penalties may be assessed pursuant to 12 U.S.C.
1972(2)(F)(ii) in an amount not to exceed $48,114 for each day during
which the violation, practice or breach continues. Tier Three civil
money penalties may be assessed pursuant to 12 U.S.C. 1972(2)(F)(iii)
in an amount not to exceed, in the case of any person other than an
insured depository institution $1,924,589 for each day during which the
violation, practice, or breach continues or, in the case of any insured
depository institution, an amount not to exceed the lesser of
$1,924,589 or 1 percent of the total assets of such institution for
each day during which the violation, practice, or breach continues.
(14) Civil money penalties assessed pursuant to 12 U.S.C. 3909(d).
Pursuant to the International Lending Supervision Act (ILSA) (12 U.S.C.
3909(d)), civil money penalties may be assessed against any institution
or any officer, director, employee, agent or
[[Page 95419]]
other person participating in the conduct of the affairs of such
institution is an amount not to exceed $2,394 for each day a violation
of the ILSA or any rule, regulation or order issued pursuant to ILSA
continues.
(15) Civil money penalties assessed for violations of 15 U.S.C.
78u-2. Pursuant to section 21B of the Securities Exchange Act of 1934
(Exchange Act) (15 U.S.C. 78u-2), civil money penalties may be assessed
for violations of certain provisions of the Exchange Act, where such
penalties are in the public interest. Tier One civil money penalties
may be assessed pursuant to 15 U.S.C. 78u-2(b)(1) in an amount not to
exceed $9,054 for a natural person or $90,535 for any other person for
violations set forth in 15 U.S.C. 78u-2(a). Tier Two civil money
penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(2) in an
amount not to exceed--for each violation set forth in 15 U.S.C. 78u-
2(a)--$90,535 for a natural person or $452,677 for any other person if
the act or omission involved fraud, deceit, manipulation, or deliberate
or reckless disregard of a regulatory requirement. Tier Three civil
money penalties may be assessed pursuant to 15 U.S.C. 78u-2(b)(3) for
each violation set forth in 15 U.S.C. 78u-2(a), in an amount not to
exceed $181,071 for a natural person or $905,353 for any other person,
if the act or omission involved fraud, deceit, manipulation, or
deliberate or reckless disregard of a regulatory requirement; and such
act or omission directly or indirectly resulted in substantial losses,
or created a significant risk of substantial losses to other persons or
resulted in substantial pecuniary gain to the person who committed the
act or omission.
(16) Civil money penalties assessed pursuant to 15 U.S.C. 1639e(k)
for appraisal independence violations. Pursuant to section 1472(a) of
the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Appraisal Independence Rule) (15 U.S.C. 1639e(k)), civil money
penalties may be assessed for an initial violation of the Appraisal
Independence Rule in an amount not to exceed $11,053 for each day
during which the violation continues and, for subsequent violations,
$22,105 for each day during which the violation continues.
(17) Civil money penalties assessed for false claims and statements
pursuant to 31 U.S.C. 3802. Pursuant to the Program Fraud Civil
Remedies Act (31 U.S.C. 3802), civil money penalties of not more than
$10,957 per claim or statement may be assessed for violations involving
false claims and statements.
(18) Civil money penalties assessed for violations of 42 U.S.C.
4012a(f). Pursuant to the Flood Disaster Protection Act (FDPA) (42
U.S.C. 4012a(f)), civil money penalties may be assessed against any
regulated lending institution that engages in a pattern or practice of
violations of the FDPA in an amount not to exceed $2,090 per violation.
Dated at Washington, DC, this 21st day of December, 2016.
By order of the Board of Directors.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
[FR Doc. 2016-31240 Filed 12-27-16; 8:45 am]
BILLING CODE 6714-01-P
