12 U.S.C. § 5537 — Senior investor protections

Page 1975 TITLE 12—BANKS AND BANKING § 5537 1 See References in Text note below. § 5536. Prohibited acts (a) In general It shall be unlawful for— (1) any covered person or service provider— (A) to offer or provide to a consumer any financial product or service not in con- formity with Federal consumer financial law, or otherwise commit any act or omis- sion in violation of a Federal consumer fi- nancial law; or (B) to engage in any unfair, deceptive, or abusive act or practice; (2) any covered person or service provider to fail or refuse, as required by Federal consumer financial law, or any rule or order issued by the Bureau thereunder— (A) to permit access to or copying of records; (B) to establish or maintain records; or (C) to make reports or provide information to the Bureau; or (3) any person to knowingly or recklessly provide substantial assistance to a covered person or service provider in violation of the provisions of section 5531 of this title, or any rule or order issued thereunder, and notwith- standing any provision of this title,1 the pro- vider of such substantial assistance shall be deemed to be in violation of that section to the same extent as the person to whom such assistance is provided. (b) Exception No person shall be held to have violated sub- section (a)(1) solely by virtue of providing or selling time or space to a covered person or serv- ice provider placing an advertisement. (Pub. L. 111–203, title X, § 1036, July 21, 2010, 124 Stat. 2010.) Editorial Notes REFERENCES IN TEXT This title, where footnoted in subsec. (a)(3), is title X of Pub. L. 111–203, July 21, 2010, 124 Stat. 1955, known as the Consumer Financial Protection Act of 2010, which enacted this subchapter and enacted, amended, and re- pealed numerous other sections and notes in the Code. For complete classification of title X to the Code, see Short Title note set out under section 5301 of this title and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective on the designated transfer date, see section 1037 of Pub. L. 111–203, set out as a note under section 5531 of this title. § 5537. Senior investor protections (a) Definitions As used in this section— (1) the term ‘‘eligible entity’’ means— (A) a securities commission (or any agency or office performing like functions) of a State that the Office determines has adopted rules on the appropriate use of designations in the offer or sale of securities or the provi- sion of investment advice that meet or ex- ceed the minimum requirements of the NASAA Model Rule on the Use of Senior- Specific Certifications and Professional Des- ignations (or any successor thereto); (B) the insurance commission (or any agency or office performing like functions) of any State that the Office determines has— (i) adopted rules on the appropriate use of designations in the sale of insurance products that, to the extent practicable, conform to the minimum requirements of the National Association of Insurance Commissioners Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (or any suc- cessor thereto); and (ii) adopted rules with respect to fidu- ciary or suitability requirements in the sale of annuities that meet or exceed the minimum requirements established by the Suitability in Annuity Transactions Model Regulation of the National Association of Insurance Commissioners (or any suc- cessor thereto); or (C) a consumer protection agency of any State, if— (i) the securities commission (or any agency or office performing like functions) of the State is eligible under subparagraph (A); or (ii) the insurance commission (or any agency or office performing like functions) of the State is eligible under subparagraph (B); (2) the term ‘‘financial product’’ means a se- curity, an insurance product (including an in- surance product that pays a return, whether fixed or variable), a bank product, and a loan product; (3) the term ‘‘misleading designation’’— (A) means a certification, professional des- ignation, or other purported credential that indicates or implies that a salesperson or ad- viser has special certification or training in advising or servicing seniors; and (B) does not include a certification, profes- sional designation, license, or other creden- tial that— (i) was issued by or obtained from an academic institution having regional ac- creditation; (ii) meets the standards for certifi- cations and professional designations out- lined by the NASAA Model Rule on the Use of Senior-Specific Certifications and Professional Designations (or any suc- cessor thereto) or by the Model Regula- tions on the Use of Senior-Specific Certifi- cations and Professional Designations in the Sale of Life Insurance and Annuities, adopted by the National Association of In- surance Commissioners (or any successor thereto); or (iii) was issued by or obtained from a State; (4) the term ‘‘misleading or fraudulent mar- keting’’ means the use of a misleading des- Page 1976 TITLE 12—BANKS AND BANKING § 5537 ignation by a person that sells to or advises a senior in connection with the sale of a finan- cial product; (5) the term ‘‘NASAA’’ means the North American Securities Administrators Associa- tion; (6) the term ‘‘Office’’ means the Office of Fi- nancial Literacy of the Bureau; (7) the term ‘‘senior’’ means any individual who has attained the age of 62 years or older; and (8) the term ‘‘State’’ has the same meaning as in section 78c(a) of title 15. (b) Grants to States for enhanced protection of seniors from being misled by false designa- tions The Office shall establish a program under which the Office may make grants to States or eligible entities— (1) to hire staff to identify, investigate, and prosecute (through civil, administrative, or criminal enforcement actions) cases involving misleading or fraudulent marketing; (2) to fund technology, equipment, and train- ing for regulators, prosecutors, and law en- forcement officers, in order to identify sales- persons and advisers who target seniors through the use of misleading designations; (3) to fund technology, equipment, and train- ing for prosecutors to increase the successful prosecution of salespersons and advisers who target seniors with the use of misleading des- ignations; (4) to provide educational materials and training to regulators on the appropriateness of the use of designations by salespersons and advisers in connection with the sale and mar- keting of financial products; (5) to provide educational materials and training to seniors to increase awareness and understanding of misleading or fraudulent marketing; (6) to develop comprehensive plans to com- bat misleading or fraudulent marketing of fi- nancial products to seniors; and (7) to enhance provisions of State law to pro- vide protection for seniors against misleading or fraudulent marketing. (c) Applications A State or eligible entity desiring a grant under this section shall submit an application to the Office, in such form and in such a manner as the Office may determine, that includes— (1) a proposal for activities to protect sen- iors from misleading or fraudulent marketing that are proposed to be funded using a grant under this section, including— (A) an identification of the scope of the problem of misleading or fraudulent mar- keting in the State; (B) a description of how the proposed ac- tivities would— (i) protect seniors from misleading or fraudulent marketing in the sale of finan- cial products, including by proactively identifying victims of misleading and fraudulent marketing who are seniors; (ii) assist in the investigation and pros- ecution of those using misleading or fraud- ulent marketing; and (iii) discourage and reduce cases of mis- leading or fraudulent marketing; and (C) a description of how the proposed ac- tivities would be coordinated with other State efforts; and (2) any other information, as the Office de- termines is appropriate. (d) Performance objectives and reporting re- quirements The Office may establish such performance ob- jectives and reporting requirements for States and eligible entities receiving a grant under this section as the Office determines are necessary to carry out and assess the effectiveness of the pro- gram under this section. (e) Maximum amount The amount of a grant under this section may not exceed— (1) $500,000 for each of 3 consecutive fiscal years, if the recipient is a State, or an eligible entity of a State, that has adopted rules— (A) on the appropriate use of designations in the offer or sale of securities or invest- ment advice that meet or exceed the min- imum requirements of the NASAA Model Rule on the Use of Senior-Specific Certifi- cations and Professional Designations (or any successor thereto); (B) on the appropriate use of designations in the sale of insurance products that, to the extent practicable, conform to the minimum requirements of the National Association of Insurance Commissioners Model Regulation on the Use of Senior-Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (or any suc- cessor thereto); and (C) with respect to fiduciary or suitability requirements in the sale of annuities that meet or exceed the minimum requirements established by the Suitability in Annuity Transactions Model Regulation of the Na- tional Association of Insurance Commis- sioners (or any successor thereto); and (2) $100,000 for each of 3 consecutive fiscal years, if the recipient is a State, or an eligible entity of a State, that has adopted— (A) rules on the appropriate use of designa- tions in the offer or sale of securities or in- vestment advice that meet or exceed the minimum requirements of the NASAA Model Rule on the Use of Senior-Specific Certifi- cations and Professional Designations (or any successor thereto); or (B) rules— (i) on the appropriate use of designations in the sale of insurance products that, to the extent practicable, conform to the minimum requirements of the National Association of Insurance Commissioners Model Regulation on the Use of Senior- Specific Certifications and Professional Designations in the Sale of Life Insurance and Annuities (or any successor thereto); and (ii) with respect to fiduciary or suit- ability requirements in the sale of annu- ities that meet or exceed the minimum re- Page 1977 TITLE 12—BANKS AND BANKING § 5538 1 So in original. Probably should be followed by a comma. quirements established by the Suitability in Annuity Transactions Model Regulation of the National Association of Insurance Commissioners (or any successor thereto). (f) Subgrants A State or eligible entity that receives a grant under this section may make a subgrant, as the State or eligible entity determines is necessary to carry out the activities funded using a grant under this section. (g) Reapplication A State or eligible entity that receives a grant under this section may reapply for a grant under this section, notwithstanding the limitations on grant amounts under subsection (e). (h) Authorization of appropriations There are authorized to be appropriated to carry out this section, $8,000,000 for each of fis- cal years 2011 through 2015. (Pub. L. 111–203, title IX, § 989A, July 21, 2010, 124 Stat. 1941.) Editorial Notes CODIFICATION Section was not enacted as part of subtitle C of title X of Pub. L. 111–203, which comprises this part. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 1 day after July 21, 2010, except as otherwise provided, see section 4 of Pub. L. 111–203, set out as a note under section 5301 of this title. § 5538. Mortgage loans; rulemaking procedures; enforcement (a)(1) The Bureau of Consumer Financial Pro- tection shall have authority to prescribe rules with respect to mortgage loans in accordance with section 553 of title 5. Such rulemaking shall relate to unfair or deceptive acts or prac- tices regarding mortgage loans, which may in- clude unfair or deceptive acts or practices in- volving loan modification and foreclosure rescue services. Any violation of a rule prescribed under this paragraph shall be treated as a viola- tion of a rule prohibiting unfair, deceptive, or abusive acts or practices under the Consumer Financial Protection Act of 2010 and a violation of a rule under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or practices. (2) The Bureau of Consumer Financial Protec- tion shall enforce the rules issued under para- graph (1) in the same manner, by the same means, and with the same jurisdiction, powers, and duties, as though all applicable terms and provisions of the Consumer Financial Protection Act of 2010 were incorporated into and made part of this subsection. (3) Subject to subtitle B of the Consumer Fi- nancial Protection Act of 2010 [12 U.S.C. 5511 et seq.], the Federal Trade Commission shall en- force the rules issued under paragraph (1), in the same manner, by the same means, and with the same jurisdiction, as though all applicable terms and provisions of the Federal Trade Com- mission Act [15 U.S.C. 41 et seq.] were incor- porated into and made part of this section. (b)(1) Except as provided in paragraph (6), in any case in which the attorney general of a State has reason to believe that an interest of the residents of the State has been or is threat- ened or adversely affected by the engagement of any person subject to a rule prescribed under subsection (a) in practices that violate such rule, the State, as parens patriae, may bring a civil action on behalf of its residents in an ap- propriate district court of the United States or other court of competent jurisdiction— (A) to enjoin that practice; (B) to enforce compliance with the rule; (C) to obtain damages, restitution, or other compensation on behalf of the residents of the State; or (D) to obtain penalties and relief provided under the Consumer Financial Protection Act of 2010, the Federal Trade Commission Act [15 U.S.C. 41 et seq.], and such other relief as the court deems appropriate. (2) The State shall serve written notice to the Bureau of Consumer Financial Protection or the Commission, as appropriate 1 of any civil action under paragraph (1) at least 60 days prior to ini- tiating such civil action. The notice shall in- clude a copy of the complaint to be filed to ini- tiate such civil action, except that if it is not feasible for the State to provide such prior no- tice, the State shall provide notice immediately upon instituting such civil action. (3) Upon receiving the notice required by para- graph (2), and subject to subtitle B of the Con- sumer Financial Protection Act of 2010 [12 U.S.C. 5511 et seq.], the Bureau of Consumer Fi- nancial Protection or the Commission, as appro- priate 1 may intervene in such civil action and upon intervening— (A) be heard on all matters arising in such civil action; (B) remove the action to the appropriate United States district court; and (C) file petitions for appeal of a decision in such civil action. (4) Nothing in this subsection shall prevent the attorney general of a State from exercising the powers conferred on the attorney general by the laws of such State to conduct investigations or to administer oaths or affirmations or to compel the attendance of witnesses or the pro- duction of documentary and other evidence. Nothing in this section shall prohibit the attor- ney general of a State, or other authorized State officer, from proceeding in State or Federal court on the basis of an alleged violation of any civil or criminal statute of that State. (5) In a civil action brought under paragraph (1)— (A) the venue shall be a judicial district in which the defendant is found, is an inhabitant, or transacts business or wherever venue is proper under section 1391 of title 28; and (B) process may be served without regard to the territorial limits of the district or of the State in which the civil action is instituted. (6) Whenever a civil action or an administra- tive action has been instituted by or on behalf of the Bureau of Consumer Financial Protection or