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FINRA ordered an investment bank to pay more than $10 million in restitution for suitability violations relating to mutual fund transactions. FINRA found that from January 2010 through June 2015, the bank's supervisory systems were not sufficient to prevent unsuitable switching. In particular, the firm incorrectly defined a mutual switch in its supervisory procedures to require three separate transactions within a certain time frame. Based on this incorrect definition, the bank (i) failed to act on thousands of automated alerts for potentially unsuitable transactions, (ii) excluded

The CFTC settled charges against an investment bank that failed to disclose certain conflicts of interest to clients. Specifically, the bank failed to disclose its preference for investing client funds in certain commodity pools or exempt pools, namely hedge funds and mutual funds managed and operated by an affiliate and subsidiary of the bank. The CFTC required the bank to pay a $40 million civil monetary penalty, to disgorge $60 million and to cease and desist from further violations.

Commentary by Steven Lofchie

The Basel Committee on Banking Supervision proposed a conceptual framework with the objective of mitigating "spillover effects" from the shadow banking system to banks. For the purposes of the consultative document, step-in risk refers to the risk that a bank will provide financial support to an entity beyond or in the absence of its contractual obligations, should the entity experience financial stress. The proposals would form the basis of an approach for identifying, assessing and addressing step-in risk potentially embedded in banks' relationships with shadow banking entities. According to

The Office of the Comptroller of the Currency ("OCC") solicited comments on a proposed rule to establish guidelines for recovery planning by banks. The guidelines would apply to insured national banks, insured federal savings associations and insured federal branches of foreign banks with average total consolidated assets of $50 billion or more ("covered banks"). The OCC emphasized that due to "recent large-scale operational events, such as destructive cyber attacks," institutions must plan how to address significant stress events before they occur. Highlights of the proposal include the

The Office of the Comptroller of the Currency ("OCC") issued a report titled " Semiannual Risk Perspective for Fall 2015 ." According to the report, risks associated with underwriting and cybersecurity are increasing, while strategic, compliance and interest rate risks remain stable. The report addresses key issues faced by banks and presents the following findings: The Operating Environment . Competitive pressures, the search for revenue growth and an ongoing low-interest-rate environment continue to challenge bank risk management and influence appetites for risk. In this environment, banks