SEC Waives "Bad Actor" Disqualification for Bank

The SEC Division of Corporate Finance waived the "bad actor" disqualification from exemptions provided by Rule 506 under Regulation D for Citizens Bank N.A. and the Citizens Bank of Pennsylvania (collectively, "Citizens Bank").

The waiver was required due to consent orders that Citizens Bank had entered into with both the OCC and FDIC in 2015. The consent orders, in which Citizens Bank neither admitted nor denied wrongdoing, resolved allegations by the OCC and FDIC that Citizens Bank had engaged in unfair and deceptive practices in violation of Section 5(a)(1) of the Federal Trade Commission Act.

The SEC determined that the bank made "a showing of good cause under Rule 506(d)(2)(ii) of Regulation D" such that a bad actor disqualification is unnecessary. The waiver is contingent on the continued compliance with the terms of the consent orders.