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OCC Enforcement Attorney

Our OCC Defense Lawyers Bring Relevant Experience to Defending Clients in OCC Enforcement Matters

John W. Sellers
Attorney John W. Sellers
OCC Enforcement Team Lead
Former DOJ Trial Attorney
envelope iconContact John

The Office of the Comptroller of the Currency (OCC) works alongside the U.S. Securities and Exchange Commission (SEC), Financial Crimes Enforcement Network (FinCEN), and other federal authorities to maintain the security and legitimacy of the nation’s financial markets. As part of its duties, the OCC pursues enforcement actions against banks and other financial institutions suspected of violating the Bank Secrecy Act (BSA) and other relevant laws.

As OCC enforcement actions can lead to substantial penalties, financial institutions targeted in these actions must assert comprehensive and strategic defenses. At Oberheiden P.C., our defense attorneys bring relevant experience to defending clients against OCC penalties. This includes not only experience as federal defense counsel but also prior experience as U.S. Department of Justice (DOJ) attorneys responsible for prosecuting financial crimes.

We Serve As Defense Counsel for All Types of OCC Enforcement Actions

The OCC pursues several different types of enforcement actions against banks and other financial institutions in the U.S. We defend institutions facing all types of OCC enforcement actions. While certain types of OCC enforcement actions may seem relatively benign, all OCC inquiries have the potential to lead to additional scrutiny; and, if an institution’s leadership team is not careful, a seemingly insignificant interaction with the OCC could quickly lead to significant liability exposure.

With this in mind, it is vital for targeted institutions and “institution-affiliated parties” to engage experienced defense counsel regardless of the nature of an OCC enforcement action. Our federal defense lawyers are available to handle common OCC enforcement matters including:

  • Capital Directives – When a financial institution is in non-compliance with the applicable federal capital maintenance regulations, the OCC can issue a capital directive requiring compliance, submission of an “acceptable capital plan,” or other action.
  • Cease-and-Desist Orders – In appropriate cases, the OCC can impose cease-and-desist orders against financial institutions and “institution-affiliated parties” to preclude any “unsafe or unsound practice or violation [to require] affirmative action to correct or remedy any conditions resulting from any violation or practice.”
  • Prompt Corrective Action Directives (PCAD) – FDIC-insured financial institutions are subject to the OCC’s prompt corrective action (PCA) authority. The OCC can impose both mandatory and discretionary prompt corrective action directives (PCAD), with specific requirements varying based on the FDIC-insured institution’s capital category.
  • Restitution Orders – When violations result in losses to customers or other third parties, the OCC can use its enforcement authority to impose mandatory “reimbursement, indemnification, or guarantee against loss” without instituting judicial proceedings.
  • Civil Monetary Penalty (CMP) Orders – In addition to, or in lieu of, cease-and-desist orders, restitution orders, and other administrative enforcement actions, the OCC can also impose civil monetary penalties for violations of the BSA and other federal financial laws and regulations.
  • Securities Enforcement Actions – Along with violations of the BSA and other federal financial laws and regulations, the OCC can also institute enforcement actions against financial institutions under the nation’s securities laws. In OCC enforcement proceedings under federal securities laws, the Office can impose penalties including “civil money penalties, cease and desist orders, injunctions, censures, suspensions, bars, removals, [and] limitations . . . .”

In addition to these common OCC enforcement matters, we represent financial institutions and “institution-affiliated parties” (i.e., bank executives) in other enforcement matters as well. This includes (but is not limited to):

  • Formal Agreements
  • Gramm-Leach-Bliley (GLBA) Agreements
  • Prohibition/Suspension Orders for Criminal Conduct
  • 1818(e) Prohibition Orders
  • 1829 Prohibition Notifications
  • Safety & Soundness Orders (SASO)

Financial institutions targeted in OCC enforcement proceedings can seek to resolve these matters through various means. Oftentimes, represented institutions will be able to resolve OCC investigations without facing formal charges or enforcement action. Settlement is a viable solution in many cases as well. However, litigation is also a possibility; and, when evaluating the risks associated with OCC enforcement actions, financial institution executives must work closely with their institutions’ outside counsel to determine the most cost-effective and most advantageous path forward.

While relatively rare, the OCC also has the authority to institute litigation directly against financial institutions and “institution-affiliated parties”. If your institution has received (or you personally have received) a Notice of Charges or Notice of Assessment of Civil Monetary Penalty, this means that the OCC is pursuing litigation, and it is imperative that you discuss the notice with defense counsel promptly.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Civil Monetary Penalties (CMP) in OCC Enforcement Proceedings

Along with cease-and-desist orders and other forms of injunctive relief, civil monetary penalties (CMP) are among the most common sanctions imposed in OFF enforcement proceedings. The CMP at stake in OCC enforcement proceedings depends on the nature and severity of the alleged statutory or regulatory violations, with CMP falling into one of three “tiers” in most cases.

Civil Monetary Penalty “Tiers” in OCC Enforcement Proceedings

The OCC’s ability to impose tier-based civil monetary penalties is based on its general CMP authority under 12 U.S.C. Section 1818. The OCC’s tiers establish the “maximum amounts that the OCC may assess for each day that . . . actionable conduct continues,” with the maximum amounts being determined based on “the severity of the actionable conduct and the level of culpability.”

Tier 1 CMP

OCC enforcement proceedings can lead to Tier 1 CMP in cases involving violations of laws, regulations, orders, written agreements, and conditions imposed in connection with financial institution applications and requests. Tier 1 CMP start at $5,000 per violation per day under 12 U.S.C. Section 1818, subject to adjustments for inflation under 12 CFR Section 19.240.

Tier 2 CMP

The OCC can impose Tier 2 CMP against financial institutions and “institution-affiliated parties” in cases involving the same violations that trigger Tier 1 CMP, reckless unsafe or unsound practices, or breaches of fiduciary duty. However, in order to trigger Tier 2 CMP, a violation must either:

  • Reflect a pattern of misconduct;
  • Cause (or be likely to cause) “more than a minimal loss” to the institution; or,
  • Result in pecuniary gain to the “institution-affiliated party” involved.

Tier 2 CMP start at $25,000 per violation per day, adjusted annually for inflation.

Tier 3 CMP

Tier 3 CMP are reserved for cases involving knowing violations. In addition to knowingly committing a violation, the institution or “institution-affiliated party” must also knowingly or recklessly cause either:

  • Substantial loss to the institution; or,
  • Substantial gain to the “institution-affiliated party” involved.

In OCC enforcement proceedings involving Tier 3 CMP, targets other than FDIC-insured financial institutions can face monetary penalties of up to $1,000,000 (adjusted for inflation). FDIC-insured financial institutions can face monetary penalties equal to the lesser of $1,000,000 (adjusted for inflation) or one percent of the institution’s total assets.

OCC’s Authority to Impose Other Civil Monetary Penalties

In addition to imposing Tier-based civil monetary penalties under 12 U.S.C. Section 1818, the OCC has the authority to impose other statutory and regulatory CMP in enforcement proceedings as well. This includes (but is not limited to) imposing penalties for violations of “change of control regulations, call report filing requirements, and flood insurance laws and regulations.”

FAQs: Understanding the Risks of OCC Enforcement Proceedings for Financial Institutions and “Institution-Affiliated Parties”

What is the difference between informal and formal OCC enforcement actions?

 

Informal OCC enforcement actions generally target alleged violations that are relatively minor in comparison to the overall range of conduct prohibited under the BSA and other applicable federal financial and securities laws. As the OCC explains, “[e]xaminers should consider an informal bank enforcement action when a bank’s condition is sound but deficiencies have not been corrected in a timely manner or escalat[ed appropriately].”

In contrast, the OCC pursues formal enforcement actions in cases involving alleged violations that are “severe, uncorrected, repeat, unsafe or unsound, or negatively affect the bank’s condition.” Formal OCC enforcement actions generally present greater risks for financial institutions and “institution-affiliated parties,” though informal actions can transition to formal actions if examiners uncover evidence warranting such action.

What factors determine the civil monetary penalties imposed in OCC enforcement actions under 12 U.S.C. Section 1818?

 

When imposing Tier-based CMP under 18 U.S.C. Section 1818, the OCC must consider several factors. For institutions and “institution-affiliated parties” at risk for Tier-based CMP in OCC enforcement proceedings, ensuring appropriate application of these factors can be a key strategy for mitigating their liability. The primary factors the OCC must consider when imposing Tier-based CMP in formal enforcement actions include:

  • The institution or institution-affiliated party’s financial resources
  • The institution or institution-affiliated party’s good faith
  • The severity of the violation
  • Any history of prior violations
  • “Such other matters as justice may require”

What Should Financial Institutions Do When Facing OCC Enforcement Actions?

 

Due to the complexity of the OCC’s enforcement program and the risks of facing formal OCC enforcement actions, financial institutions targeted by the OCC should work closely with outside counsel to execute a comprehensive and strategic defense. By taking a proactive approach, targeted institutions can often mitigate their risk substantially; and in many cases, institutions can achieve amicable resolutions without facing charges or the risk of litigation.


Discuss Your OCC Enforcement Defense Strategy with an OCC Attorney at Oberheiden P.C.

If you need to know more about defending against an OCC enforcement action, we encourage you to contact us for a complimentary consultation. To speak with an OCC Defense Attorney at Oberheiden P.C. in confidence, please call 888-680-1745 or tell us how we can contact you online today.

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