Yahoo Finance Comerica Bank N.A, OCC Enters Agreement Over Compliance Issues (Revised)
Comerica Bank & Trust, N.A entered into an enforcement agreement with the Office of the Comptroller of the Currency (OCC). This relates to the bank’s unsafe and unsound practices concerning the risk governance framework and internal controls.
Per the agreement, Comerica Bank, N.A has to set up a compliance committee to demonstrate its implementation of proper board oversight and corporate governance to OCC. To ensure accurate reporting of financial transactions, Comerica Bank, N.A is required to implement an all-inclusive data management plan.
Further, the bank has to improve its financial data collection and regulatory reporting with independent reviews to ensure accuracy and compliance.
The bank is required to create a third-party risk management program. The program must include the integration of strong internal controls with an updated internal audit program. This will ensure comprehensive and independent evaluations of its operations and improve accuracy.
Comerica Bank, N.A must mitigate risks associated with outdated IT assets. It should include policies for managing existing and new technology assets, conducting risk assessments and planning for upgrading or replacing obsolete systems.
Per OCC's statement, the bank’s board of directors will be responsible for overseeing the swift adoption and execution of the corrective actions that are mentioned in the agreement. This includes authorizing necessary measures, ensuring sufficient staffing and training, and holding management accountable for compliance.
Prior to this, Comerica Bank, N.A had been under water, owing to a failed technological update that led to overdrawing its accounts by millions of dollars. The incident led to significant disruptions and questioned the bank's capabilities of technology management.
Before the technological error, the bank had been in trouble for mismanaging the Treasury Department's Direct Express program, which delivers federal benefits to millions of unbanked Americans. Internal documents exposed compliance failures, such as outsourcing sensitive data handling activity to a vendor's office in Pakistan and breaching contractual obligations.
Legal Issues Faced by Other Finance Companies
Citigroup Inc. C has been fined $78.4 million by a pair of British regulators due to the bank’s deficiencies in the systems and controls. These flaws led a trader to make an inputting error that caused a flash crash in May 2022. The penalty amount consisted of £27.8 million from the Financial Conduct Authority (FCA) and £33.9 million from the Bank of England’s (BoE) Prudential Regulation Authority (PRA).
According to the FCA, a trader from Citigroup meant to sell a basket of equities worth $58 million but accidentally made a basket valued at $444 billion, which passed through the trading algorithm. The bank’s flawed control systems failed to ‘hard block’ the transaction, which had prevented the error from transpiring.
Currently, C carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In early May, Robinhood Markets, Inc. HOOD received a notice from the Securities and Exchange Commission (SEC) that its crypto business — Robinhood Crypto — could face enforcement action. The notice comes as a result of the violation of registrations as a securities broker and transfer agent.
The regulator has argued that most tokens are subject to SEC rules. Thus, the platforms where they trade ought to be registered with the agency. The regulator relies on a test laid out in a 1946 Supreme Court case in order to figure out whether an asset falls within the securities rules.
At present, HOOD carries a Zacks Rank #2 (Buy).
(We are reissuing this article to correct a mistake. The original article, issued on May 24, 2024, should no longer be relied upon.)
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