On January 26, the Consumer Financial Protection Bureau (Bureau) published a Notice and Request for Information (RFI) on civil investigative demands (CIDs) and associated processes, marking the first request in a series of reviews the new Acting Director initiated reportedly to ensure that the Bureau is fulfilling its proper and appropriate functions to best protect consumers.1 Earlier this month, the Bureau announced it would begin "critically examin[ing] its policies and practices to ensure they align with the Bureau's statutory mandate" by publishing RFIs seeking comment on enforcement, supervision, rulemaking, market monitoring, and education activities.2
The initiation of the review of Bureau functions occurs amid a period of change at the agency and is consistent with the message being communicated to Bureau staff. Indeed, on January 23, Acting Director Mulvaney sent an email to CFPB staff describing certain philosophical changes that would occur under the new leadership. In the two-page email, the Acting Director stated that the CFPB "will be reviewing everything ... from investigations to lawsuits to everything in between[,]" and that "the days of aggressively 'pushing the envelope' of the law in the name of the 'mission' are over."
The first RFI requesting feedback on CIDs may provide a meaningful opportunity for the industry to advocate for more efficient and less burdensome investigative processes. CIDs are the investigative tool used by the Bureau's Office of Enforcement to request information from individuals and institutions that may have materials relevant to an investigation. Oftentimes, compliance with CIDs can be challenging for the recipient, requiring it to meet and confer with the Bureau within 10 days of receiving the CID; and then to respond to interrogatories, requests for documents, and requests for written reports; and also to provide testimony in a relatively short period of time. CFPB regulations allow for the recipient to challenge the CID by petitioning the Bureau to set aside or modify the CID, but that process favors the Bureau. First, instead of appealing to an independent, neutral arbiter, the appeal must be made to the Bureau, which originally made the decision to issue the CID. Second, by regulation, all petitions and Bureau decisions become part of the public record. Thus, unless the Bureau determines not to publish for good cause shown, the otherwise confidential CID issued to the recipient will be published on the CFPB website.
The Bureau stated that it is requesting feedback on all aspects of the CID process, and identified 11 specific issues for comment, which are reproduced below.
- The Bureau's processes for initiating investigations, including 12 C.F.R. § 1080.4's delegation of authority to initiate investigations to the Assistant Director of the Office of Enforcement Start Printed Page 3687 and the Deputy Assistant Directors of the Office of Enforcement;
- The Bureau's processes for the issuance of CIDs, including the non-delegable authority of the Director, Assistant Director of the Office of Enforcement, and the Deputy Assistant Directors of the Office of Enforcement to issue CIDs;
- Specific steps that the Bureau could take to improve CID recipients' understanding of investigations, whether through the notification of purpose included in each CID or through other avenues, including facilitating a better understanding of the specific types of information sought by the CID;
- The nature and scope of requests included in Bureau CIDs, including whether topics, questions, or requests for written reports effectively achieve the Bureau's statutory and regulatory objectives, while minimizing burdens, consistent with applicable law, and the extent to which the meet and confer process helps achieve these objectives;
- The timeframes associated with each step of the Bureau's CID process, including return dates, and the specific timeframes for meeting and conferring, and petitioning to modify or set aside a CID;
- The Bureau's taking of testimony from an entity, including whether 12 C.F.R. § 1080.6(a)(4)(ii), and/or the Bureau's processes should be modified to make expressly clear that the standards applicable to Federal Rule of Civil Procedure 30(b)(6) also apply to the Bureau's taking of testimony from an entity;
- The Bureau's processes for handling the inadvertent production of privileged information, including whether 12 C.F.R. § 1080.8(c) and/or the Bureau's processes should be modified in order to make expressly clear that the standards applicable to Federal Rule of Evidence 502 also apply to documents inadvertently produced in response to a CID;
- The rights afforded to witnesses by 12 C.F.R. § 1080.9, including limitations on the role of counsel described in 12 C.F.R. § 1080.9(b) in light of the statutory delineation of objections set forth in 12 U.S.C. 5562(c)(13)(D)(iii);
- The Bureau's processes concerning meeting and conferring with recipients of CIDs, including, for example, negotiations regarding modifications and the delegation of authority to the Assistant Director of the Office of Enforcement and Deputy Assistant Directors of the Office of Enforcement to negotiate and approve the terms of satisfactory compliance with civil investigative demands and extending the time for compliance;
- The Bureau's requirements for responding to CIDs, including certification requirements, and the Bureau's CID document submission standards; and
The Bureau's processes concerning CID recipients' petitions to modify or set aside Bureau CIDs, including:
- Whether it is appropriate for Bureau investigators to provide the Director with a statement setting out a response to the petition without serving that response on the petitioner;
- Whether petitions and the Director's orders should be made public, consistent with applicable laws; and
- The costs and benefits of the petition to modify or set aside process, vis-à-vis direct adjudication in Federal court, in light of the statutory requirement for the petition process and the fact that CIDs are not self-enforcing.
Comments must be received by March 27, 2018. Provided here is a link to the RFI published in the Federal Register. If you would like assistance in submitting comments on the RFI, please contact one of the attorneys listed herein.
1. 83 Fed. Reg. 3686 (Jan. 26, 2018).
2. Acting Director Mulvaney Announces Call for Evidence Regarding Consumer Financial Protection Bureau Functions, Bureau Press Release (Jan. 17, 2018).
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