Federal Register / Vol. 77, No. 126 / Friday, June 29, 2012 / Rules and Regulations 39101 

§ 1081.405 Decision of the Director. 

(a) Upon appeal from or upon further 

review of a recommended decision, the 

Director will consider such parts of the 

record as are cited or as may be 

necessary to resolve the issues 

presented and, in addition, will, to the 

extent necessary or desirable, exercise 

all powers which he or she could have 

exercised if he or she had made the 

recommended decision. In proceedings 

before the Director, the record shall 

consist of all items part of the record 

below in accordance with § 1081.306; 

any notices of appeal or order directing 

review; all briefs, motions, submissions, 

and other papers filed on appeal or 

review; and the transcript of any oral 

argument held. Review by the Director 

of a recommended decision may be 

limited to the issues specified in the 

notice(s) of appeal or the issues, if any, 

specified in the order directing further 

briefing. On notice to all parties, 

however, the Director may, at any time 

prior to issuance of his or her decision, 

raise and determine any other matters 

that he or she deems material, with 

opportunity for oral or written argument 

thereon by the parties. 

(b) Decisional employees may advise 

and assist the Director in the 

consideration and disposition of the 

case. 

(c) In rendering his or her decision, 

the Director will affirm, adopt, reverse, 

modify, set aside, or remand for further 

proceedings the recommended decision 

and will include in the decision a 

statement of the reasons or basis for his 

or her actions and the findings of fact 

upon which the decision is predicated. 

(d) At the expiration of the time 

permitted for the filing of reply briefs 

with the Director, the Office of 

Administrative Adjudication will notify 

the parties that the case has been 

submitted for final Bureau decision. The 

Director will issue and the Office of 

Administrative Adjudication will serve 

the Director’s final decision and order 

within 90 days after such notice, unless 

within that time the Director orders that 

the adjudication proceeding or any 

aspect thereof be remanded to the 

hearing officer for further proceedings. 

(e) Copies of the final decision and 

order of the Director shall be served 

upon each party to the proceeding, upon 

other persons required by statute, and, 

if directed by the Director or required by 

statute, upon any appropriate State or 

Federal supervisory authority. The final 

decision and order will also be 

published on the Bureau’s Web site or 

as otherwise deemed appropriate by the 

Bureau. 

§ 1081.406 Reconsideration. 

Within 14 days after service of the 

Director’s final decision and order, any 

party may file with the Director a 

petition for reconsideration, briefly and 

specifically setting forth the relief 

desired and the grounds in support 

thereof. Any petition filed under this 

section must be confined to new 

questions raised by the final decision or 

final order and upon which the 

petitioner had no opportunity to argue, 

in writing or orally, before the Director. 

No response to a petition for 

reconsideration shall be filed unless 

requested by the Director, who will 

request such response before granting 

any petition for reconsideration. The 

filing of a petition for reconsideration 

shall not operate to stay the effective 

date of the final decision or order or to 

toll the running of any statutory period 

affecting such decision or order unless 

specifically so ordered by the Director. 

§ 1081.407 Effective date; stays pending 

judicial review. 

(a) Other than consent orders, which 

shall become effective at the time 

specified therein, an order to cease and 

desist or for other affirmative action 

under section 1053(b) of the Dodd-Frank 

Act becomes effective at the expiration 

of 30 days after the date of service 

pursuant to § 1081.113(d)(2), unless the 

Director agrees to stay the effectiveness 

of the order pursuant to this section. 

(b) Any party subject to a final 

decision and order, other than a consent 

order, may apply to the Director for a 

stay of all or part of that order pending 

judicial review. 

(c) A motion for stay shall state the 

reasons a stay is warranted and the facts 

relied upon, and shall include 

supporting affidavits or other sworn 

statements, and a copy of the relevant 

portions of the record. The motion shall 

address the likelihood of the movant’s 

success on appeal, whether the movant 

will suffer irreparable harm if a stay is 

not granted, the degree of injury to other 

parties if a stay is granted, and why the 

stay is in the public interest. 

(d) A motion for stay shall be filed 

within 30 days of service of the order on 

the party. Any party opposing the 

motion may file a response within five 

days after receipt of the motion. The 

movant may file a reply brief, limited to 

new matters raised by the response, 

within three days after receipt of the 

response. 

(e) The commencement of 

proceedings for judicial review of a final 

decision and order of the Director does 

not, unless specifically ordered by the 

Director or a reviewing court, operate as 

a stay of any order issued by the 

Director. The Director may, in his or her 

discretion, and on such terms as he or 

she finds just, stay the effectiveness of 

all or any part of an order pending a 

final decision on a petition for judicial 

review of that order. 

Dated: June 4, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–14061 Filed 6–28–12; 8:45 am] 

BILLING CODE 4810–AM–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1080 

[Docket No.: CFPB–2011–0007] 

RIN 3170–AA03 

Rules Relating to Investigations 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

SUMMARY: After considering the public 

comments on its interim final rule for 

the Rules Relating to Investigations, the 

Bureau of Consumer Financial 

Protection (Bureau), pursuant to the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (DoddFrank Act), is making revisions to its 

procedures for investigations under 

section 1052 of the Dodd-Frank Act. 

DATES: The final rule is effective June 

29, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Peter G. Wilson, Office of the General 

Counsel, Consumer Financial Protection 

Bureau, 1700 G Street NW., Washington, 

DC 20552, (202) 435–7585. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Wall Street Reform 

and Consumer Protection Act of 2010 

(Dodd-Frank Act) was signed into law 

on July 21, 2010. Title X of the DoddFrank Act established the Bureau of 

Consumer Financial Protection (Bureau) 

to regulate the offering and provision of 

consumer financial products or services 

under the Federal consumer financial 

laws. The Dodd-Frank Act transferred to 

the Bureau the consumer financial 

protection functions formerly carried 

out by the Federal banking agencies, as 

well as certain authorities formerly 

carried out by the Department of 

Housing and Urban Development (HUD) 

and the Federal Trade Commission 

(FTC). As required by section 1062 of 

the Dodd-Frank Act, 12 U.S.C. 5582, the 

Secretary of the Treasury selected a 


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39102 Federal Register / Vol. 77, No. 126 / Friday, June 29, 2012 / Rules and Regulations 

designated transfer date and the Federal 

banking agencies’ functions and 

authorities transferred to the Bureau on 

July 21, 2011. 

The Dodd-Frank Act authorizes the 

Bureau to conduct investigations to 

ascertain whether any person is or has 

been engaged in conduct that, if proved, 

would constitute a violation of any 

provision of Federal consumer financial 

law. Section 1052 of the Dodd-Frank 

Act sets forth the parameters that govern 

these investigations. 12 U.S.C. 5562. 

Section 1052 became effective 

immediately upon transfer on July 21, 

2011 and did not require rules to 

implement its provisions. On July 28, 

2011, the Bureau issued the interim 

final rule for the Rules Relating to 

Investigations (Interim Final Rule) to 

provide parties involved in Bureau 

investigations with clarification on how 

to comply with the statutory 

requirements relating to Bureau 

investigations. 

II. Summary of the Final Rule 

Consistent with section 1052 of the 

Dodd-Frank Act, the final rule for the 

Rules Relating to Investigations (Final 

Rule) describes a number of Bureau 

policies and procedures that apply in an 

investigational, nonadjudicative setting. 

Among other things, the Final Rule sets 

forth (1) the Bureau’s authority to 

conduct investigations, and (2) the 

rights of persons from whom the Bureau 

seeks to compel information in 

investigations. 

Like the Interim Final Rule, the Final 

Rule is modeled on investigative 

procedures of other law enforcement 

agencies. For guidance, the Bureau 

reviewed the procedures currently used 

by the FTC, the Securities and Exchange 

Commission (SEC), and the prudential 

regulators, as well as the FTC’s recently 

proposed amendments to its 

nonadjudicative procedures. In light of 

the similarities between section 1052 of 

the Dodd-Frank Act and section 20 of 

the Federal Trade Commission Act (FTC 

Act), 15 U.S.C. 41 et seq., the Bureau 

drew most heavily from the FTC’s 

nonadjudicative procedures in 

constructing the rules. 

The Final Rule lays out the Bureau’s 

authority to conduct investigations 

before instituting judicial or 

administrative adjudicatory proceedings 

under Federal consumer financial law. 

The Final Rule authorizes the Director, 

the Assistant Director of the Office of 

Enforcement, and the Deputy Assistant 

Directors of the Office of Enforcement to 

issue civil investigative demands (CIDs) 

for documentary material, tangible 

things, written reports, answers to 

questions, or oral testimony. The 

demands may be enforced in district 

court by the Director, the General 

Counsel, or the Assistant Director of the 

Office of Enforcement. The Final Rule 

also details the authority of the Bureau’s 

investigators to conduct investigations 

and hold investigational hearings 

pursuant to civil investigative demands 

for oral testimony. 

Furthermore, the Final Rule sets forth 

the rights of persons from whom the 

Bureau seeks to compel information in 

an investigation. Specifically, the Final 

Rule describes how such persons should 

be notified of the purpose of the 

Bureau’s investigation. It also details the 

procedures for filing a petition for an 

order modifying or setting aside a CID, 

which the Director is authorized to rule 

upon. And it describes the process by 

which persons may obtain copies of or 

access to documents or testimony they 

have provided in response to a civil 

investigative demand. In addition, the 

Final Rule describes a person’s right to 

counsel at investigational hearings. 

III. Legal Authority 

As noted above, section 1052 of the 

Dodd-Frank Act outlines how the 

Bureau will conduct investigations and 

describes the rights of persons from 

whom the Bureau seeks information in 

investigations. This section became 

effective immediately upon the 

designated transfer date, July 21, 2011, 

without any requirement that the 

Bureau first issue procedural rules. 

Nevertheless, the Bureau believes that 

the legislative purpose of section 1052 

will be furthered by the issuance of 

rules that specify the manner in which 

persons can comply with its provisions. 

Section 1022 of the Dodd-Frank Act 

authorizes the Director to prescribe 

rules as may be necessary or appropriate 

for the Bureau to administer and carry 

out the purposes and objectives of 

Federal consumer financial laws and to 

prevent evasion of those laws. 12 U.S.C. 

5512. The Bureau believes that the Final 

Rule will effectuate the purpose of 

section 1052 and facilitate compliance 

with Bureau investigations. 

IV. Overview of Public Comments on 

the Interim Final Rule 

After publication of the Interim Final 

Rule on July 28, 2011, the Bureau 

accepted public comments until 

September 26, 2011. During the 

comment period, the Bureau received 

seven comments. Two of the comments 

were submitted by individual 

consumers. Four trade associations and 

a mortgage company also submitted 

comments. The trade associations 

represent credit unions, banks, 

consumer credit companies, members of 

the real estate finance industry, and 

other financial institutions. 

The commenters generally support 

the Interim Final Rule. Most sections of 

the Interim Final Rule received no 

comment and are being finalized 

without change. The comments did, 

however, contain questions and 

recommendations for the Bureau. 

Several of the commenters expressed 

concern that the Interim Final Rule 

appeared to provide staff-level Bureau 

employees with unchecked authority to 

initiate investigations and issue CIDs, or 

that the Interim Final Rule otherwise 

did not provide sufficient oversight for 

particular actions. 

A number of commenters expressed 

concern about sections of the Interim 

Final Rule that relate to CIDs. One trade 

association recommended that a 

statement of ‘‘the purpose and scope’’ of 

a Bureau investigation—in addition to a 

notification of the nature of the conduct 

constituting the alleged violation under 

investigation and the applicable 

provisions of law—be included in CIDs. 

A commenter suggested that the Bureau 

require a conference between CID 

recipients and the Assistant Director of 

the Office of Enforcement to negotiate 

the terms of compliance with the 

demand. Three of the trade associations 

noted concern with the statement that 

extensions of time are disfavored for 

petitions to modify or set aside CIDs. 

Two commenters questioned who 

would rule on such petitions without a 

confirmed Director. One trade 

association commented that witnesses 

should be permitted to object to 

questions demanding information 

outside of the scope of the investigation 

during an investigational hearing 

pursuant to a CID for oral testimony. 

A number of commenters expressed 

concern about maintaining the 

confidentiality of demand material, 

sharing information with other State 

and Federal agencies, and the duties of 

the custodians of those materials. For 

example, one trade association and the 

mortgage company recommended that 

investigations should remain 

confidential in all circumstances. 

Another trade association asserted that 

the Bureau is not permitted to engage in 

joint investigations with State attorneys 

general. 

The Bureau reviewed all of the 

comments on its Interim Final Rule 

thoroughly and addresses the significant 

issues they raise herein. Although most 

sections of the Interim Final Rule 

received no comment and are being 

finalized without change, the Bureau 

has made several changes to the Interim 

Final Rule based on the comments it 

received. The comments and these 


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Federal Register / Vol. 77, No. 126 / Friday, June 29, 2012 / Rules and Regulations 39103 

changes are discussed in more detail in 

parts V and VI of the SUPPLEMENTARY

INFORMATION. 

V. General Comments 

Some comments on the Interim Final 

Rule were not directed at a specific 

section but rather concerned issues of 

general applicability. The Bureau 

addresses those comments in this 

section and addresses comments related 

to specific sections of the Interim Final 

Rule in part VI. 

One commenter asked the Bureau to 

specify who would rule on petitions to 

set aside or modify CIDs while the 

Bureau lacked a Director. This 

commenter also asked who would 

review requests to the Attorney General 

under § 1080.12 for authority to 

immunize witnesses and to order them 

to testify or provide other information. 

The President appointed a Director of 

the Bureau on January 4, 2012. 

Therefore, both questions posed by this 

commenter are moot. The Director or 

any official to whom the Director has 

delegated his authority pursuant to 12 

U.S.C. 5492(b) will rule on petitions to 

set aside or modify CIDs. Furthermore, 

the Bureau has revised § 1080.12 to 

clarify that only the Director has the 

authority to request approval from the 

Attorney General for the issuance of an 

order immunizing witnesses. 

A commenter asserted that section 

1052(c)(1) of the Dodd-Frank Act 

prohibits the Bureau from issuing CIDs 

after the institution of any proceedings 

under Federal consumer financial laws, 

including proceedings initiated by a 

State or a private party. The commenter 

argued that a CID should be 

accompanied by a certification that the 

demand will have no bearing on any 

ongoing proceeding. Section 1052(c)(1) 

provides, in relevant part, that ‘‘the 

Bureau may, before the institution of 

any proceedings under the Federal 

consumer financial law, issue in 

writing, and cause to be served upon 

such person, a civil investigative 

demand.’’ The language ‘‘before the 

institution of any proceeding under 

Federal consumer financial law’’ refers 

to the institution of proceedings by the 

Bureau. It does not limit the Bureau’s 

authority to issue CIDs based upon the 

commencement of a proceeding by other 

parties. 

Another commenter requested that 

the Bureau exempt all credit unions 

from Bureau investigations. The Bureau 

believes that granting an exemption 

from the Bureau’s enforcement authority 

through the Final Rule would be 

inappropriate and that there is an 

insufficient record to support such an 

exemption. 

A commenter recommended that 

covered persons be allowed to recover 

attorneys’ fees and costs incurred by 

defending against an investigation that 

is shown to be without merit. The DoddFrank Act does not provide the right to 

recover fees and costs by defending 

against an investigation. Further, as 

explained below, the Bureau believes 

that the procedures for petitioning to 

modify or set aside a CID set forth in 

§ 1080.6(d) of the Interim Final Rule 

(now 1080.6(e) of the Final Rule) 

provide sufficient protections to a 

recipient of a demand it believes lacks 

merit. 

VI. Section-by-Section Summary 

Section 1080.1 Scope 

This section describes the scope of the 

Interim Final Rule. It makes clear that 

these rules only apply to investigations 

under section 1052 of the Dodd-Frank 

Act. The Bureau received no comment 

on § 1080.1 of the Interim Final Rule 

and is adopting it as the Final Rule 

without change. 

Section 1080.2 Definitions 

This section of the Interim Final Rule 

defines several terms used throughout 

the rules. Many of these definitions also 

may be found in section 1051 of the 

Dodd-Frank Act. 

A commenter questioned the breadth 

of the definition of the term ‘‘Assistant 

Director of the Division of 

Enforcement.’’ The commenter argued 

that because that term was defined to 

include ‘‘any Bureau employee to whom 

the Assistant Director of the Division of 

Enforcement has delegated authority to 

act under this part,’’ the Interim Final 

Rule could give Bureau employees 

inappropriately broad authority to take 

certain actions, such as issuing CIDs. 

The Bureau has revised the Final Rule 

in response to these comments. The 

Final Rule identifies those with 

authority to take particular actions 

under each section of the Final Rule. 

Sections 1080.4 (initiating and 

conducting investigations) and 1080.6 

(civil investigative demands) of the 

Final Rule clarify that the authority to 

initiate investigations and issue CIDs 

cannot be delegated by the identified 

officials. The Final Rule also changes 

the defined term ‘‘Division of 

Enforcement’’ to ‘‘Office of 

Enforcement’’ to reflect the Bureau’s 

current organizational structure. 

Section 1080.3 Policy as to Private 

Controversies 

This section of the Interim Final Rule 

states the Bureau’s policy of pursuing 

investigations that are in the public 

interest. Section 1080.3 is consistent 

with the Bureau’s mission to protect 

consumers by investigating potential 

violations of Federal consumer financial 

law. The Bureau received no comments 

on § 1080.3 of the Interim Final Rule 

and is adopting it as the Final Rule 

without change. 

Section 1080.4 Initiating and 

Conducting Investigations 

This section of the Interim Final Rule 

explains that Bureau investigators are 

authorized to conduct investigations 

pursuant to section 1052 of the DoddFrank Act. 

A commenter observed that this 

section of the Interim Final Rule did not 

explicitly provide a procedure for senior 

agency officials to authorize the opening 

of an investigation. The commenter 

argued that only senior agency officials 

should decide whether to initiate 

investigations. The commenter 

questioned whether staff-level 

employees could open investigations 

and issue CIDs without sufficient 

supervision, and noted that the FTC’s 

analogous rule specifically lists the 

senior officials to whom the 

Commission has delegated, without 

power of redelegation, the authority to 

initiate investigations. 

A commenter also expressed concern 

that the FTC’s analogous rule explicitly 

provides that FTC investigators must 

comply with the laws of the United 

States and FTC regulations. According 

to the commenter, such language is 

necessary to ensure that the Bureau 

complies with the Right to Financial 

Privacy Act (RFPA) to the extent that 

statute applies to the Bureau. The 

commenter also believes that this 

language is needed to guard against 

investigations undertaken for what the 

commenter characterized as the 

impermissible purpose of aiding State 

attorneys general or State regulators. 

The commenter suggested that the 

Bureau add a statement to this section 

of the Interim Final Rule similar to the 

FTC’s rule requiring compliance with 

Federal law and agency regulations. 

The Final Rule clarifies that only the 

Assistant Director or any Deputy 

Assistant Director of the Office of 

Enforcement has the authority to initiate 

investigations. The Bureau has 

significant discretion to determine 

whether and when to open an 

investigation, and the public benefits 

from a process whereby the Bureau can 

open and close investigations 

efficiently. But the Bureau did not 

intend its rules to be interpreted so 

broadly as to suggest that any staff-level 

employee could unilaterally open an 

investigation or issue a CID. The Final 


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39104 Federal Register / Vol. 77, No. 126 / Friday, June 29, 2012 / Rules and Regulations 

Rule also provides that Bureau 

investigators will perform their duties in 

accordance with Federal law and 

Bureau regulations. 

Section 1080.5 Notification of Purpose 

This section of the Interim Final Rule 

specifies that a person compelled to 

provide information to the Bureau or to 

testify in an investigational hearing 

must be advised of the nature of the 

conduct constituting the alleged 

violation under investigation and the 

applicable provisions of law. This 

section of the Interim Final Rule 

implements the requirements for CIDs 

described in section 1052(c)(2) of the 

Dodd-Frank Act. 

Commenters noted that although the 

Dodd-Frank Act and the FTC Act both 

require CIDs to state ‘‘the nature of the 

conduct constituting the alleged 

violation which is under investigation 

and the provision of law applicable to 

such violation,’’ the two agencies’ 

implementing regulations on this topic 

differ. Both agencies’ regulations require 

a statement of the nature of the conduct 

at issue and the relevant provisions of 

law, but the FTC rule also requires that 

the recipient of the CID be advised of 

‘‘the purpose and scope’’ of the 

investigation. Commenters argued that 

the Bureau should add this phrase to its 

rule because excluding it would lead to 

requests for materials outside the scope 

of an investigation. One commenter 

argued that only senior agency officials 

should authorize investigations to 

ensure that CIDs are relevant to the 

purpose and scope of the Bureau’s 

investigations. 

The language in § 1080.5 of the 

Interim Final Rule mirrors the language 

of the Dodd-Frank Act, which provides 

that ‘‘[e]ach civil investigative demand 

shall state the nature of the conduct 

constituting the alleged violation which 

is under investigation and the provision 

of law applicable to such violation.’’ 

The Bureau believes that the 

information covered by this statutory 

language provides sufficient notice to 

recipients of CIDs. As discussed above, 

§ 1080.4 (initiating and conducting 

investigations) of the Final Rule limits 

the authority to open investigations to 

the Assistant Director or any Deputy 

Assistant Director of the Office of 

Enforcement. Similarly, § 1080.6 of the 

Final Rule (civil investigative demands) 

limits the authority to issue CIDs to the 

Director of the Bureau, the Assistant 

Director of the Office of Enforcement, 

and the Deputy Assistant Directors of 

the Office of Enforcement. Thus, one of 

these identified officials will review and 

approve the initiation of all 

investigations and the issuance of all 

CIDs. In addition, to the extent 

recipients of CIDs consider the demands 

to be for an unauthorized purpose or 

outside the scope of the investigation, 

they will have an opportunity to 

negotiate the terms of compliance 

pursuant to § 1080.6(c) of the Interim 

Final Rule (now § 1080.6(d) of the Final 

Rule) or to petition to set aside or 

modify the demand pursuant to 

§ 1080.6(d) of the Interim Final Rule 

(now § 1080.6(e) of the Final Rule). 

The Bureau therefore adopts this 

section of the Interim Final Rule as the 

Final Rule without change. 

Section 1080.6 Civil Investigative 

Demands 

This section of the Interim Final Rule 

lays out the Bureau’s procedures for 

issuing CIDs. It authorizes the Assistant 

Director of the Office of Enforcement to 

issue CIDs for documentary material, 

tangible things, written reports, answers 

to questions, and oral testimony. This 

section of the Interim Final Rule details 

the information that must be included 

in CIDs and the requirement that 

responses be made under a sworn 

certificate. Section 1080.6 of the Interim 

Final Rule also authorizes the Assistant 

Director of the Office of Enforcement to 

negotiate and approve the terms of 

compliance with CIDs and grant 

extensions for good cause. Finally, this 

section of the Interim Final Rule 

describes the procedures for seeking an 

order to modify or set aside a CID, 

which the Director is authorized to rule 

upon. 

One commenter argued that 

§ 1080.6(a) permits almost any Bureau 

employee to issue CIDs without 

sufficient supervision. The commenter 

stated that this lack of oversight is 

problematic and does not reflect 

Congress’ intent when it enacted the 

Act. 

Section 1080.6(a) of the Final Rule 

limits the authority to issue CIDs to the 

Director, the Assistant Director of the 

Office of Enforcement, and the Deputy 

Assistant Directors of the Office of 

Enforcement. This change to the Final 

Rule balances the efficiency of the 

Bureau’s investigative process with 

appropriate supervision and oversight. 

A commenter suggested that the 

Bureau require a conference between 

the CID recipient and the Assistant 

Director of the Office of Enforcement 

within ten days of service of the CID to 

negotiate and approve the terms of 

compliance. The commenter envisioned 

a conference analogous to a discovery 

planning conference under the Federal 

Rules of Civil Procedure, during which 

the parties could discuss requests for 

information, appropriate limitations on 

the scope of requests, issues related to 

electronically stored information (ESI), 

issues related to privilege and 

confidential information, and a 

reasonable time for compliance. The 

commenter stated that this type of 

conference would better ensure prompt 

and efficient production of material and 

information related to the investigation. 

The Bureau agrees that a conference 

between the parties within ten calendar 

days of serving a CID is likely to 

improve the efficiency of investigations, 

and § 1080.6(c) of the Final Rule 

provides for such a conference. The 

Final Rule does not, however, adopt the 

suggestion that the Assistant Director of 

the Office of Enforcement preside over 

all such conferences. 

Several commenters also noted 

concern with the statement in 

§ 1080.6(d) of the Interim Final Rule 

disfavoring extensions of time for 

petitioning for an order modifying or 

setting aside CIDs. One commenter 

argued that the 20-day period to file 

petitions, for which extensions of time 

are disfavored, is inconsistent with the 

‘‘reasonable’’ period of time for 

compliance with the CID set forth in 

§ 1080.6(a). The commenter also argued 

that this timeframe leaves a short period 

for the CID recipient to decide which 

documents are privileged or otherwise 

protected and to file a petition 

articulating privilege and scope 

objections. Another commenter noted 

that the analogous FTC rules do not 

include a provision disfavoring 

extensions for petitions to modify or set 

aside a CID. These commenters 

recommended that the Bureau delete the 

sentence related to disfavoring 

extensions. One commenter 

recommended that the rules be 

corrected to provide an independent 

review if a covered person believes a 

CID is without merit. 

Like the Interim Final Rule, the Final 

Rule includes a provision disfavoring 

extensions of time for petitions to 

modify or set aside a CID. The Bureau 

believes its policy of disfavoring 

extensions is appropriate in light of its 

significant interest in promoting an 

efficient process for seeking materials 

through CIDs. By disfavoring 

extensions, the Bureau means to prompt 

recipients to decide within 20 days 

whether they intend to comply with the 

CID. The Final Rule also clarifies that 

this 20-day period should be computed 

with calendar days. 

The Bureau notes that § 1080.6(d) of 

the Interim Final Rule (now § 1080.6(e) 

of the Final Rule) only provides the due 

date for a petition for an order 

modifying or setting aside a CID. It does 

not require recipients to comply fully 


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Federal Register / Vol. 77, No. 126 / Friday, June 29, 2012 / Rules and Regulations 39105 

with CIDs within 20 days. In addition, 

the Final Rule provides several options 

to recipients of CIDs that need 

additional time to respond. For 

example, the recipient may negotiate for 

a reasonable extension of time for 

compliance or a rolling document 

production schedule pursuant to 

§ 1080.6(c) of the Interim Final Rule 

(now § 1080.6(d) of the Final Rule). 

Section 1080.6(e) of the Final Rule 

clarifies that recipients of CIDs should 

not assert claims of privilege through a 

petition for an order modifying or 

setting aside a CID. Instead, when 

privilege is the only basis for 

withholding particular materials, they 

should utilize the procedures set forth 

in § 1080.8 (withholding requested 

material) of the Final Rule. Section 

1080.6(e) of the Final Rule also lays out 

the authority of Bureau investigators to 

provide to the Director a reply to a 

petition seeking an order modifying or 

setting aside a CID. Specifically, the 

Final Rule states that Bureau 

investigators may provide the Director 

with a statement setting forth any 

factual and legal responses to a petition. 

The Bureau will not make these 

statements or any other internal 

deliberations part of the Bureau’s public 

records. Section 1080.6(g) of the Final 

Rule clarifies that the Bureau, however, 

will make publicly available both the 

petition and the Director’s order in 

response. Section 1080.6(g) of the Final 

Rule also clarifies that if a CID recipient 

wants to prevent the Director from 

making the petition public, any showing 

of good cause must be made no later 

than the time the petition is filed. The 

Final Rule also adds a provision 

clarifying how the Bureau will serve the 

petitioner with the Director’s order. 

Finally, the Bureau believes the 

procedures for petitions to modify or set 

aside a CID set forth in the Final Rule 

adequately protect a covered person 

who believes a CID is without merit, 

and that an additional independent 

review is unnecessary. 

Section 1080.7 Investigational 

Hearings 

This section of the Interim Final Rule 

describes the procedures for 

investigational hearings initiated 

pursuant to a CID for oral testimony. It 

also lays out the roles and 

responsibilities of the Bureau 

investigator conducting the 

investigational hearing, which include 

excluding unauthorized persons from 

the hearing room and ensuring that the 

investigational hearing is transcribed, 

the witness is duly sworn, the transcript 

is a true record of the testimony, and the 

transcript is provided to the designated 

custodian. 

A commenter argued that the Bureau 

is not authorized to conduct joint 

investigations with State attorneys 

general under the Dodd-Frank Act and, 

correspondingly, State attorneys general 

cannot attend an investigational hearing 

as a representative of an agency with 

whom the Bureau is conducting a joint 

investigation. The commenter argued 

that Congress distinguished between 

State attorneys general and State 

regulatory agencies in section 1042 of 

the Dodd-Frank Act and that State 

attorneys general are therefore not 

‘‘agencies’’ with whom the Bureau can 

partner. The commenter also asserted 

that the Bureau cannot share a copy of 

the transcript of an investigational 

hearing with another agency without the 

consent of the witness. 

Another commenter argued that 

representatives of agencies with which 

the Bureau is conducting a joint 

investigation may be present at an 

investigational hearing only with the 

witness’s consent. This commenter 

stated that the Bureau should recognize 

in the rules that a witness who does not 

consent to the presence of a 

representative of another agency at an 

investigational hearing should not be 

presumed guilty. 

The Dodd-Frank Act states that the 

Bureau ‘‘may engage in joint 

investigations and requests for 

information, as authorized under this 

title.’’ This statutory language permits 

the Bureau to engage in joint 

investigations with State or Federal law 

enforcement agencies, including State 

attorneys general, with jurisdiction that 

overlaps with the Bureau’s. The 

Bureau’s disclosure rules also permit 

the Bureau to share certain confidential 

information, including investigational 

hearing transcripts, with Federal or 

State agencies to the extent the 

disclosure is relevant to the exercise of 

an agency’s statutory or regulatory 

authority. See 12 CFR 1070.43(b). In 

addition, neither the Dodd-Frank Act 

nor the rules require the consent of the 

witness to permit a representative of an 

agency with which the Bureau is 

conducting a joint investigation to be 

present at the hearing. Consent is 

required only when people other than 

those listed in the rule are included. 

Thus, the Bureau adopts § 1080.7 of 

the Interim Final Rule as the Final Rule 

without change. 

Section 1080.8 Withholding Requested 

Material 

This section of the Interim Final Rule 

describes the procedures that apply 

when persons withhold material 

responsive to a CID. It requires the 

recipient of the CID to assert a privilege 

by the production date and, if so 

directed in the CID, also to submit a 

detailed schedule of the items withheld. 

Section 1080.8 also sets forth the 

procedures for handling the disclosure 

of privileged or protected information or 

communications. 

The Bureau received no comment on 

§ 1080.8 of the Interim Final Rule and 

is adopting it as the Final Rule without 

substantive change. 

Section 1080.9 Rights of Witnesses in 

Investigations 

This section of the Interim Final Rule 

describes the rights of persons 

compelled to submit information or 

provide testimony in an investigation. It 

details the procedures for obtaining a 

copy of submitted documents or a copy 

of or access to a transcript of the 

person’s testimony. This section of the 

Interim Final Rule also describes a 

witness’s right to make changes to his or 

her transcript and the rules for signing 

the transcript. 

Section 1080.9 of the Interim Final 

Rule lays out a person’s right to counsel 

at an investigational hearing and 

describes his or her counsel’s right to 

advise the witness as to any question 

posed for which an objection may 

properly be made. It also describes the 

witness’s or counsel’s rights to object to 

questions or requests that the witness is 

privileged to refuse to answer. This 

section of the Interim Final Rule states 

that counsel for the witness may not 

otherwise object to questions or 

interrupt the examination to make 

statements on the record but may 

request that the witness have an 

opportunity to clarify any of his or her 

answers. Finally, this section of the 

Interim Final Rule authorizes the 

Bureau investigator to take all necessary 

action during the course of the hearing 

to avoid delay and to prevent or restrain 

disorderly, dilatory, obstructionist, or 

contumacious conduct, or 

contemptuous language. 

A commenter noted that under the 

Interim Final Rule witnesses could not 

object during an investigational hearing 

on the ground that a question was 

outside the scope of the investigation. 

The commenter argued that a covered 

person’s inability to raise such 

objections might allow ‘‘a fishing 

expedition.’’ The commenter 

recommended amending § 1080.9(b) to 

allow objections based on scope. 

Section 1052(c)(13)(D)(iii) of the 

Dodd-Frank Act states, in relevant part: 

[a]n objection may properly be made, 

received, and entered upon the record when 

it is claimed that such person is entitled to 


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refuse to answer the question on grounds of 

any constitutional or other legal right or 

privilege, including the privilege against selfincrimination, but the person shall not 

otherwise object to or refuse to answer any 

question, and such person or attorney shall 

not otherwise interrupt the oral examination. 

Thus, to the extent the scope objection 

was grounded in a witness’s 

constitutional or other legal right, it 

would be a proper objection. 

The Final Rule clarifies that counsel 

may confer with a witness while a 

question is pending or instruct a witness 

not to answer a question only if an 

objection based on privilege or work 

product may properly be made. The 

Final Rule also describes counsel’s 

limited ability to make additional 

objections based on other constitutional 

or legal rights. The Final Rule provides 

that if an attorney has refused to comply 

with his or her obligations in the rules 

of this part, or has allegedly engaged in 

disorderly, dilatory, obstructionist, or 

contumacious conduct, or 

contemptuous language during an 

investigational hearing, the Bureau may 

take further action, including action to 

suspend or disbar the attorney from 

further participation in the investigation 

or further practice before the Bureau 

pursuant to 12 CFR 1081.107(c). The 

Final Rule also includes other 

nonsubstantive changes, including 

clarifying that the 30-day period that the 

witness has to sign and submit his or 

her transcript should be computed using 

calendar days. 

Section 1080.10 Noncompliance With 

Civil Investigative Demands 

This section of the Interim Final Rule 

authorizes the Director, the Assistant 

Director of the Office of Enforcement, 

and the General Counsel to initiate an 

action to enforce a CID in connection 

with the failure or refusal of a person to 

comply with, or to obey, a CID. In 

addition, they are authorized to seek 

civil contempt or other appropriate 

relief in cases where a court order 

enforcing a CID has been violated. 

The Bureau received no comment on 

§ 1080.10 of the Interim Final Rule and 

is adopting it as the Final Rule without 

substantive change. 

Section 1080.11 Disposition 

This section of the Interim Final Rule 

explains that an enforcement action may 

be instituted in Federal or State court or 

through administrative proceedings 

when warranted by the facts disclosed 

by an investigation. It further provides 

that the Bureau may refer investigations 

to appropriate Federal, State, or foreign 

government agencies as appropriate. 

This section of the Interim Final Rule 

also authorizes the Assistant Director of 

the Office of Enforcement to close the 

investigation when the facts of an 

investigation indicate an enforcement 

action is not necessary or warranted in 

the public interest. 

One commenter indicated that the 

Bureau’s authority to refer 

investigations to other law enforcement 

agencies should be limited to 

circumstances when it is expressly 

authorized to do so by the Dodd-Frank 

Act, an enumerated consumer financial 

law, or other Federal law, because of 

potential risks to the confidentiality of 

the investigatory files. 

The Bureau’s ability to refer matters to 

appropriate law enforcement agencies is 

inherent in the Bureau’s authority and 

is a corollary to the Bureau’s statutorily 

recognized ability to conduct joint 

investigations. The documentary 

materials and tangible things obtained 

by the Bureau pursuant to a CID are 

subject to the requirements and 

procedures relating to disclosure of 

records and information in part 1070 of 

this title. These procedures for sharing 

information with law enforcement 

agencies provide significant and 

sufficient protections for these 

materials. 

The Bureau has amended § 1080.11 to 

clarify that the Assistant Director and 

any Deputy Assistant Director of the 

Office of Enforcement are authorized to 

close investigations. 

The Bureau adopts § 1080.11 of the 

Interim Final Rule with the changes 

discussed above. 

Section 1080.12 Orders Requiring 

Witnesses To Testify or Provide Other 

Information and Granting Immunity 

This section of the Interim Final Rule 

authorizes the Assistant Director of the 

Office of Enforcement to request 

approval from the Attorney General for 

the issuance of an order requiring a 

witness to testify or provide other 

information and granting immunity 

under 18 U.S.C. 6004. The Interim Final 

Rule also sets forth the Bureau’s right to 

review the exercise of these functions 

and states that the Bureau will entertain 

an appeal from an order requiring a 

witness to testify or provide other 

information only upon a showing that a 

substantial question is involved, the 

determination of which is essential to 

serve the interests of justice. Finally, 

this section of the Interim Final Rule 

describes the applicable rules and time 

limits for such appeals. 

A commenter questioned whether this 

section of the Interim Final Rule would 

permit any Bureau employee to request 

that the Attorney General approve the 

issuance of an order granting immunity 

under 18 U.S.C. 6004 and requiring a 

witness to testify or provide 

information. The commenter noted that 

the Dodd-Frank Act authorizes the 

Bureau, with the Attorney General’s 

permission, to compel a witness to 

testify under 18 U.S.C. 6004 if the 

witness invokes his or her privilege 

against self-incrimination. The 

commenter argued that this section 

should delegate the authority to seek 

permission to compel testimony to a 

specific individual to provide 

accountability and ensure that 

information is not disclosed to the 

Attorney General in a manner that 

violates the Right to Financial Privacy 

Act. The commenter noted that the 

FTC’s analogous rule specifically lists 

the senior agency officials who are 

authorized to make such requests to the 

Attorney General, and identifies a 

liaison officer through whom such 

requests must be made. The commenter 

also suggested that § 1080.12(b) of the 

Interim Final Rule, which provides that 

the Assistant Director’s exercise of this 

authority is subject to review by ‘‘the 

Bureau,’’ specify who will conduct this 

review. 

The Final Rule provides that only the 

Director of the Bureau has the authority 

to request approval from the Attorney 

General for the issuance of an order 

requiring a witness to testify or provide 

other information and granting 

immunity under 18 U.S.C. 6004. This 

change addresses the concern that 

requests for witness immunity would be 

made without oversight. Limiting this 

authority to the Director provides 

sufficient accountability. 

Section 1080.13 Custodians 

This section of the Interim Final Rule 

describes the procedures for designating 

a custodian and deputy custodian for 

material produced pursuant to a CID in 

an investigation. It also states that these 

materials are for the official use of the 

Bureau, but, upon notice to the 

custodian, must be made available for 

examination during regular office hours 

by the person who produced them. 

A commenter suggested that the 

Bureau should detail the particular 

duties of custodians designated under 

this section and that, without an 

enumerated list of duties, the custodian 

would not have any responsibilities 

regarding CID materials. The commenter 

noted that the FTC Act requires the 

custodian to take specific actions, while 

the Dodd-Frank Act does not. The 

commenter suggested specifying a series 

of custodial duties, including (1) taking 

and maintaining custody of all materials 

submitted pursuant to CIDs or 

subpoenas that the Bureau issues, 


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1Section 1022(b)(2)(A) of the Dodd-Frank Act 

addresses the consideration of the potential benefits 

and costs of regulation to consumers and covered 

persons, including the potential reduction of access 

by consumers to consumer financial products or 

services; the impact on depository institutions and 

credit unions with $10 billion or less in total assets 

as described in section 1026 of the Dodd-Frank Act; 

and the impact on consumers in rural areas. Section 

1022(b)(2)(B) addresses consultation between the 

Bureau and other Federal agencies during the 

rulemaking process. The manner and extent to 

which these provisions apply to procedural rules 

and benefits, costs and impacts that are compelled 

by statutory changes rather than discretionary 

Bureau action is unclear. Nevertheless, to inform 

this rulemaking more fully, the Bureau performed 

the described analyses and consultations. 

including transcripts of oral testimony 

taken by the Bureau; (2) maintaining 

confidentiality of those materials as 

required by applicable law; (3) 

providing the materials to either House 

of Congress upon request, after ten days 

notice to the party that owns or 

submitted the materials; (4) producing 

any materials as required by a court of 

competent jurisdiction; and (5) 

complying at all times with the Trade 

Secrets Act. 

Section 1052 of the Dodd-Frank Act 

sets forth the duties of the Bureau’s 

custodian. Sections 1052(c)(3) through 

(c)(6) of the Dodd-Frank Act give the 

custodian responsibility for receiving 

documentary material, tangible things, 

written reports, answers to questions, 

and transcripts of oral testimony given 

by any person in compliance with any 

CID. Section 1052(d) of the Dodd-Frank 

Act, as well as the Bureau’s Rules for 

Disclosure of Records and Information 

in part 1070 of this title, outline the 

requirements for the confidential 

treatment of demand material. Section 

1052(g) addresses custodial control and 

provides that a person may file, in the 

district court of the United States for the 

judicial district within which the office 

of the custodian is situated, a petition 

for an order of such court requiring the 

performance by the custodian of any 

duty imposed upon him by section 1052 

of the Dodd-Frank Act or by Bureau 

rule. These duties and obligations do 

not require additional clarification by 

rule. 

The Final Rule clarifies that the 

custodian has the powers and duties of 

both section 1052 of the Dodd-Frank Act 

and 12 CFR 1070.3. 

The Bureau adopts § 1080.13 of the 

Interim Final Rule with the changes 

discussed above. 

Section 1080.14 Confidential 

Treatment of Demand Material and 

Non-Public Nature of Investigations 

Section 1080.14 of the Interim Final 

Rule explains that documentary 

materials, written reports, answers to 

questions, tangible things, or transcripts 

of oral testimony received by the Bureau 

in any form or format pursuant to a CID 

are subject to the requirements and 

procedures relating to disclosure of 

records and information in part 1070 of 

this title. This section of the Interim 

Final Rule also states that investigations 

generally are non-public. A Bureau 

investigator may disclose the existence 

of an investigation to the extent 

necessary to advance the investigation. 

A commenter recommended that the 

Bureau revise this section to mandate 

that Bureau investigations remain 

confidential. The commenter noted the 

potential reputation risk to an entity if 

an investigation is disclosed to the 

public. In addition, the commenter 

argued that failing to conduct 

investigations confidentially will 

increase litigation risk. One commenter 

recommended that the Bureau issue a 

public absolution of a company if the 

Bureau does not maintain the 

confidentiality of an investigation. 

Section 1080.14 of the Interim Final 

Rule provides that investigations 

generally will not be disclosed to the 

public, but permits Bureau investigators 

to disclose the existence of an 

investigation when necessary to 

advance the investigation. The Interim 

Final Rule does not contemplate 

publicizing an investigation, but rather 

disclosing the existence of the 

investigation to, for example, a potential 

witness or third party with potentially 

relevant information when doing so is 

necessary to advance the investigation. 

This limited exception sufficiently 

balances the concerns expressed by the 

commenter with the Bureau’s need to 

obtain information efficiently. 

Thus, the Bureau adopts § 1080.14 of 

the Interim Final Rule as the Final Rule 

without change. 

VII. Section 1022(b)(2) Provisions 

In developing the Final Rule, the 

Bureau has considered the potential 

benefits, costs, and impacts, and has 

consulted or offered to consult with the 

prudential regulators, HUD, the SEC, the 

Department of Justice, and the FTC, 

including with regard to consistency 

with any prudential, market, or systemic 

objectives administered by such 

agencies.1

The Final Rule neither imposes any 

obligations on consumers nor is 

expected to have any appreciable 

impact on their access to consumer 

financial products or services. Rather, 

the Final Rule provides a clear, efficient 

mechanism for investigating compliance 

with the Federal consumer financial 

laws, which benefits consumers by 

creating a systematic process to protect 

them from unlawful behavior. 

The Final Rule imposes certain 

obligations on covered persons who 

receive CIDs in Bureau investigations. 

Specifically, as described above, the 

Final Rule sets forth the process for 

complying with or objecting to CIDs for 

documentary material, tangible things, 

written reports or answers to questions, 

and oral testimony. Most obligations in 

the Final Rule stem from express 

language in the Dodd-Frank Act and do 

not impose additional burdens on 

covered persons. 

To the extent that the Final Rule 

includes provisions not expressly 

required by statute, these provisions 

benefit covered persons by providing 

clarity and certainty. In addition, the 

Final Rule vests the Bureau with 

discretion to modify CIDs or extend the 

time for compliance for good cause. 

This flexibility benefits covered persons 

by enabling the Bureau to assess the cost 

of compliance with a civil investigative 

demand in a particular circumstance 

and take appropriate steps to mitigate 

any unreasonable compliance burden. 

Moreover, because the Final Rule is 

largely based on section 20 of the FTC 

Act and its corresponding regulations, it 

should present an existing, stable model 

of investigatory procedures to covered 

persons. This likely familiarity to 

covered persons should further reduce 

the compliance costs for covered 

persons. 

The Final Rule provides that requests 

for extensions of time to file petitions to 

modify or set aside CIDs are disfavored. 

This may impose a burden on covered 

entities in some cases, but it may also 

lead to a more expeditious resolution of 

matters, reducing uncertainty. 

Furthermore, the Final Rule has no 

unique impact on insured depository 

institutions or insured credit unions 

with less than $10 billion in assets as 

described in section 1026(a) of the 

Dodd-Frank Act. Nor does the Final 

Rule have a unique impact on rural 

consumers. 

A commenter suggested that the 

Bureau conduct a nonpublic study of 

the impact of complying with a CID on 

the entities who have been subjected to 

them by other agencies, with specific 

focus on those that were found not to 

have violated the law. As the 

commenter implicitly recognizes, such 

data does not currently exist and thus 

was not reasonably available to the 

Bureau in finalizing the Interim Final 

Rule. Moreover, as explained above, 

most of the costs associated with 

complying with a CID result from the 

Dodd-Frank Act, which authorizes the 

Bureau to issue such demands. 

A commenter asserted that 

disfavoring extensions of petitions to 


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modify or set aside CIDs will require the 

recipient to conduct a full review of the 

demanded material within the normal 

20-day period in order to comply with 

the deadline for filing a petition. Under 

the Final Rule, recipients of a CID are 

not required to comply fully within 

twenty days; rather, they are required 

simply to decide whether they will 

comply with the demand at all. The 

Assistant Director of the Office of 

Enforcement and the Deputy Assistant 

Directors of the Office of Enforcement 

have the discretion to negotiate and 

approve the terms of satisfactory 

compliance with CIDs and, for good 

cause shown, may extend the time 

prescribed for compliance. Thus, the 

Final Rule provides reasonable steps to 

mitigate compliance burden while 

simultaneously protecting the Bureau’s 

law enforcement interests. 

Another commenter stated that the 

four interim final rules that the Bureau 

promulgated together on July 28, 2011 

failed to satisfy the rulemaking 

requirements under section 1022 of the 

Dodd-Frank Act. Specifically, the 

commenter stated that ‘‘the CFPB’s 

analysis of the costs and benefits of its 

rules does not recognize the significant 

costs the CFPB imposes on covered 

persons.’’ The Bureau believes that it 

appropriately considered the benefits, 

costs, and impacts of the Interim Final 

Rule pursuant to section 1022. Notably, 

the commenter did not identify any 

specific costs to covered persons that 

are not discussed in Part C of the 

SUPPLEMENTARY INFORMATION to the 

Interim Final Rule. 

VIII. Procedural Requirements 

As noted in publishing the Interim 

Final Rule, under the Administrative 

Procedure Act, 5 U.S.C. 553(b), notice 

and comment is not required for rules 

of agency organization, procedure, or 

practice. As discussed in the preamble 

to the Interim Final Rule, the Bureau 

confirms its finding that this is a 

procedural rule for which notice and 

comment is not required. In addition, 

because the Final Rule relates solely to 

agency procedure and practice, it is not 

subject to the 30-day delayed effective 

date for substantive rules under section 

553(d) of the Administrative Procedure 

Act, 5 U.S.C. 551 et seq. Because no 

notice of proposed rulemaking is 

required, the requirements of the 

Regulatory Flexibility Act, 5 U.S.C. 

601(2) do not apply. Finally, the Bureau 

has determined that this Final Rule does 

not impose any new recordkeeping, 

reporting, or disclosure requirements on 

covered entities or members of the 

public that would be collections of 

information requiring approval under 44 

U.S.C. 3501. et seq. 

List of Subjects in 12 CFR Part 1080 

Administrative practice and 

procedure, Banking, Banks, Consumer 

protection, Credit, Credit unions, 

Investigations, Law enforcement, 

National banks, Savings associations, 

Trade practices. 

For the reasons set forth in the 

preamble, the Bureau of Consumer 

Financial Protection revises part 1080 to 

Chapter X in Title 12 of the Code of 

Federal Regulations to read as follows: 

PART 1080—RULES RELATING TO 

INVESTIGATIONS 

Sec. 

1080.1 Scope. 

1080.2 Definitions. 

1080.3 Policy as to private controversies. 

1080.4 Initiating and conducting 

investigations. 

1080.5 Notification of purpose. 

1080.6 Civil investigative demands. 

1080.7 Investigational hearings. 

1080.8 Withholding requested material. 

1080.9 Rights of witnesses in investigations. 

1080.10 Noncompliance with civil 

investigative demands. 

1080.11 Disposition. 

1080.12 Orders requiring witnesses to 

testify or provide other information and 

granting immunity. 

1080.13 Custodians. 

1080.14 Confidential treatment of demand 

material and non-public nature of 

investigations. 

Authority: Pub. L. 111–203, Title X, 12 

U.S.C. 5481 et seq. 

§ 1080.1 Scope. 

The rules of this part apply to Bureau 

investigations conducted pursuant to 

section 1052 of the Dodd-Frank Act, 12 

U.S.C. 5562. 

§ 1080.2 Definitions. 

For the purposes of this part, unless 

explicitly stated to the contrary: 

Bureau means the Bureau of 

Consumer Financial Protection. 

Bureau investigation means any 

inquiry conducted by a Bureau 

investigator for the purpose of 

ascertaining whether any person is or 

has been engaged in any conduct that is 

a violation. 

Bureau investigator means any 

attorney or investigator employed by the 

Bureau who is charged with the duty of 

enforcing or carrying into effect any 

Federal consumer financial law. 

Custodian means the custodian or any 

deputy custodian designated by the 

Bureau for the purpose of maintaining 

custody of information produced 

pursuant to this part. 

Director means the Director of the 

Bureau or a person authorized to 

perform the functions of the Director in 

accordance with the law. 

Documentary material means the 

original or any copy of any book, 

document, record, report, 

memorandum, paper, communication, 

tabulation, chart, log, electronic file, or 

other data or data compilation stored in 

any medium, including electronically 

stored information. 

Dodd-Frank Act means the DoddFrank Wall Street Reform and Consumer 

Financial Protection Act of 2010, as 

amended, Public Law 111–203 (July 21, 

2010), Title X, codified at 12 U.S.C. 

5481 et seq. 

Electronically stored information (ESI) 

means any information stored in any 

electronic medium from which 

information can be obtained either 

directly or, if necessary, after translation 

by the responding party into a 

reasonably usable form. 

Office of Enforcement means the 

office of the Bureau responsible for 

enforcement of Federal consumer 

financial law. 

Person means an individual, 

partnership, company, corporation, 

association (incorporated or 

unincorporated), trust, estate, 

cooperative organization, or other 

entity. 

Violation means any act or omission 

that, if proved, would constitute a 

violation of any provision of Federal 

consumer financial law. 

§ 1080.3 Policy as to private controversies. 

The Bureau shall act only in the 

public interest and will not initiate an 

investigation or take other enforcement 

action when the alleged violation is 

merely a matter of private controversy 

and does not tend to affect adversely the 

public interest. 

§ 1080.4 Initiating and conducting 

investigations. 

The Assistant Director of the Office of 

Enforcement and the Deputy Assistant 

Directors of the Office of Enforcement 

have the nondelegable authority to 

initiate investigations. Bureau 

investigations are conducted by Bureau 

investigators designated and duly 

authorized under section 1052 of the 

Dodd-Frank Act, 12 U.S.C. 5562, to 

conduct such investigations. Bureau 

investigators are authorized to exercise 

and perform their duties in accordance 

with the laws of the United States and 

the regulations of the Bureau. 

§ 1080.5 Notification of purpose. 

Any person compelled to furnish 

documentary material, tangible things, 

written reports or answers to questions, 

oral testimony, or any combination of 


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such material, answers, or testimony to 

the Bureau shall be advised of the 

nature of the conduct constituting the 

alleged violation that is under 

investigation and the provisions of law 

applicable to such violation. 

§ 1080.6 Civil investigative demands. 

(a) In general. In accordance with 

section 1052(c) of the Act, the Director 

of the Bureau, the Assistant Director of 

the Office of Enforcement, and the 

Deputy Assistant Directors of the Office 

of Enforcement, have the nondelegable 

authority to issue a civil investigative 

demand in any Bureau investigation 

directing the person named therein to 

produce documentary material for 

inspection and copying or reproduction 

in the form or medium requested by the 

Bureau; to submit tangible things; to 

provide a written report or answers to 

questions; to appear before a designated 

representative at a designated time and 

place to testify about documentary 

material, tangible things, or other 

information; and to furnish any 

combination of such material, things, 

answers, or testimony. 

(1) Documentary material. (i) Civil 

investigative demands for the 

production of documentary material 

shall describe each class of material to 

be produced with such definiteness and 

certainty as to permit such material to 

be fairly identified, prescribe a return 

date or dates that will provide a 

reasonable period of time within which 

the material so demanded may be 

assembled and made available for 

inspection and copying or reproduction, 

and identify the custodian to whom 

such material shall be made available. 

Documentary material for which a civil 

investigative demand has been issued 

shall be made available as prescribed in 

the civil investigative demand. 

(ii) Production of documentary 

material in response to a civil 

investigative demand shall be made 

under a sworn certificate, in such form 

as the demand designates, by the person 

to whom the demand is directed or, if 

not a natural person, by any person 

having knowledge of the facts and 

circumstances relating to such 

production, to the effect that all of the 

documentary material required by the 

demand and in the possession, custody, 

or control of the person to whom the 

demand is directed has been produced 

and made available to the custodian. 

(2) Tangible things. (i) Civil 

investigative demands for tangible 

things shall describe each class of 

tangible things to be produced with 

such definiteness and certainty as to 

permit such things to be fairly 

identified, prescribe a return date or 

dates which will provide a reasonable 

period of time within which the things 

so demanded may be assembled and 

submitted, and identify the custodian to 

whom such things shall be submitted. 

(ii) Submissions of tangible things in 

response to a civil investigative demand 

shall be made under a sworn certificate, 

in such form as the demand designates, 

by the person to whom the demand is 

directed or, if not a natural person, by 

any person having knowledge of the 

facts and circumstances relating to such 

production, to the effect that all of the 

tangible things required by the demand 

and in the possession, custody, or 

control of the person to whom the 

demand is directed have been submitted 

to the custodian. 

(3) Written reports or answers to 

questions. (i) Civil investigative 

demands for written reports or answers 

to questions shall propound with 

definiteness and certainty the reports to 

be produced or the questions to be 

answered, prescribe a date or dates at 

which time written reports or answers 

to questions shall be submitted, and 

identify the custodian to whom such 

reports or answers shall be submitted. 

(ii) Each reporting requirement or 

question in a civil investigative demand 

shall be answered separately and fully 

in writing under oath. Responses to a 

civil investigative demand for a written 

report or answers to questions shall be 

made under a sworn certificate, in such 

form as the demand designates, by the 

person to whom the demand is directed 

or, if not a natural person, by any person 

responsible for answering each 

reporting requirement or question, to 

the effect that all of the information 

required by the demand and in the 

possession, custody, control, or 

knowledge of the person to whom the 

demand is directed has been submitted 

to the custodian. 

(4) Oral testimony. (i) Civil 

investigative demands for the giving of 

oral testimony shall prescribe a date, 

time, and place at which oral testimony 

shall be commenced, and identify a 

Bureau investigator who shall conduct 

the investigation and the custodian to 

whom the transcript of such 

investigation shall be submitted. Oral 

testimony in response to a civil 

investigative demand shall be taken in 

accordance with the procedures for 

investigational hearings prescribed by 

§§ 1080.7 and 1080.9 of this part. 

(ii) Where a civil investigative 

demand requires oral testimony from an 

entity, the civil investigative demand 

shall describe with reasonable 

particularity the matters for examination 

and the entity must designate one or 

more officers, directors, or managing 

agents, or designate other persons who 

consent to testify on its behalf. Unless 

a single individual is designated by the 

entity, the entity must designate the 

matters on which each designee will 

testify. The individuals designated must 

testify about information known or 

reasonably available to the entity and 

their testimony shall be binding on the 

entity. 

(b) Manner and form of production of 

ESI. When a civil investigative demand 

requires the production of ESI, it shall 

be produced in accordance with the 

instructions provided by the Bureau 

regarding the manner and form of 

production. Absent any instructions as 

to the form for producing ESI, ESI must 

be produced in the form in which it is 

ordinarily maintained or in a reasonably 

usable form. 

(c) Meet and confer. The recipient of 

a civil investigative demand shall meet 

and confer with a Bureau investigator 

within 10 calendar days after receipt of 

the demand or before the deadline for 

filing a petition to modify or set aside 

the demand, whichever is earlier, to 

discuss and attempt to resolve all issues 

regarding compliance with the civil 

investigative demand. The Assistant 

Director of the Office of Enforcement 

and the Deputy Assistant Directors of 

the Office of Enforcement may authorize 

the waiver of this requirement for 

routine third-party civil investigative 

demands or in other circumstances 

where he or she determines that a 

meeting is unnecessary. The meeting 

may be in person or by telephone. 

(1) Personnel. The recipient must 

make available at the meeting personnel 

with the knowledge necessary to resolve 

any issues relevant to compliance with 

the demand. Such personnel could 

include individuals knowledgeable 

about the recipient’s information or 

records management systems and/or the 

recipient’s organizational structure. 

(2) ESI. If the civil investigative 

demand seeks ESI, the recipient shall 

ensure that a person familiar with its 

ESI systems and methods of retrieval 

participates in the meeting. 

(3) Petitions. The Bureau will not 

consider petitions to set aside or modify 

a civil investigative demand unless the 

recipient has meaningfully engaged in 

the meet and confer process described 

in this subsection and will consider 

only issues raised during the meet and 

confer process. 

(d) Compliance. The Assistant 

Director of the Office of Enforcement 

and the Deputy Assistant Directors of 

the Office of Enforcement are authorized 

to negotiate and approve the terms of 

satisfactory compliance with civil 

investigative demands and, for good 


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cause shown, may extend the time 

prescribed for compliance. 

(e) Petition for order modifying or 

setting aside demand—in general. Any 

petition for an order modifying or 

setting aside a civil investigative 

demand shall be filed with the 

Executive Secretary of the Bureau with 

a copy to the Assistant Director of the 

Office of Enforcement within 20 

calendar days after service of the civil 

investigative demand, or, if the return 

date is less than 20 calendar days after 

service, prior to the return date. Such 

petition shall set forth all factual and 

legal objections to the civil investigative 

demand, including all appropriate 

arguments, affidavits, and other 

supporting documentation. The attorney 

who objects to a demand must sign any 

objections. 

(1) Statement. Each petition shall be 

accompanied by a signed statement 

representing that counsel for the 

petitioner has conferred with counsel 

for the Bureau pursuant to section 

1080.6(c) in a good-faith effort to resolve 

by agreement the issues raised by the 

petition and has been unable to reach 

such an agreement. If some of the 

matters in controversy have been 

resolved by agreement, the statement 

shall specify the matters so resolved and 

the matters remaining unresolved. The 

statement shall recite the date, time, and 

place of each such meeting between 

counsel, and the names of all parties 

participating in each such meeting. 

(2) Extensions of time. The Assistant 

Director of the Office of Enforcement 

and the Deputy Assistant Directors of 

the Office of Enforcement are authorized 

to rule upon requests for extensions of 

time within which to file such petitions. 

Requests for extensions of time are 

disfavored. 

(3) Bureau investigator response. 

Bureau investigators may, without 

serving the petitioner, provide the 

Director with a statement setting forth 

any factual and legal response to a 

petition for an order modifying or 

setting aside the demand. 

(4) Disposition. The Director has the 

authority to rule upon a petition for an 

order modifying or setting aside a civil 

investigative demand. The order may be 

served on the petitioner via email, 

facsimile, or any other method 

reasonably calculated to provide notice 

of the order to the petitioner. 

(f) Stay of compliance period. The 

timely filing of a petition for an order 

modifying or setting aside a civil 

investigative demand shall stay the time 

permitted for compliance with the 

portion challenged. If the petition is 

denied in whole or in part, the ruling 

will specify a new return date. 

(g) Public disclosure. All such 

petitions and the Director’s orders in 

response to those petitions are part of 

the public records of the Bureau unless 

the Bureau determines otherwise for 

good cause shown. Any showing of 

good cause must be made no later than 

the time the petition is filed. 

§ 1080.7 Investigational hearings. 

(a) Investigational hearings, as 

distinguished from hearings in 

adjudicative proceedings, may be 

conducted pursuant to a civil 

investigative demand for the giving of 

oral testimony in the course of any 

Bureau investigation, including 

inquiries initiated for the purpose of 

determining whether or not a 

respondent is complying with an order 

of the Bureau. 

(b) Investigational hearings shall be 

conducted by any Bureau investigator 

for the purpose of hearing the testimony 

of witnesses and receiving documentary 

material, tangible things, or other 

information relating to any subject 

under investigation. Such hearings shall 

be under oath or affirmation and 

stenographically reported, and a 

transcript thereof shall be made a part 

of the record of the investigation. The 

Bureau investigator conducting the 

investigational hearing also may direct 

that the testimony be recorded by audio, 

audiovisual, or other means, in which 

case the recording shall be made a part 

of the record of the investigation as 

well. 

(c) In investigational hearings, the 

Bureau investigators shall exclude from 

the hearing room all persons except the 

person being examined, his or her 

counsel, the officer before whom the 

testimony is to be taken, any 

investigator or representative of an 

agency with which the Bureau is 

engaged in a joint investigation, and any 

individual transcribing or recording 

such testimony. At the discretion of the 

Bureau investigator, and with the 

consent of the person being examined, 

persons other than those listed in this 

paragraph may be present in the hearing 

room. The Bureau investigator shall 

certify or direct the individual 

transcribing the testimony to certify on 

the transcript that the witness was duly 

sworn and that the transcript is a true 

record of the testimony given by the 

witness. A copy of the transcript shall 

be forwarded promptly by the Bureau 

investigator to the custodian designated 

in section 1080.13. 

§ 1080.8 Withholding requested material. 

(a) Any person withholding material 

responsive to a civil investigative 

demand or any other request for 

production of material shall assert a 

claim of privilege not later than the date 

set for the production of material. Such 

person shall, if so directed in the civil 

investigative demand or other request 

for production, submit, together with 

such claim, a schedule of the items 

withheld which states, as to each such 

item, the type, specific subject matter, 

and date of the item; the names, 

addresses, positions, and organizations 

of all authors and recipients of the item; 

and the specific grounds for claiming 

that the item is privileged. The person 

who submits the schedule and the 

attorney stating the grounds for a claim 

that any item is privileged must sign it. 

(b) A person withholding material 

solely for reasons described in this 

subsection shall comply with the 

requirements of this subsection in lieu 

of filing a petition for an order 

modifying or setting aside a civil 

investigative demand pursuant to 

section 1080.6(e). 

(c) Disclosure of privileged or 

protected information or 

communications produced pursuant to a 

civil investigative demand shall be 

handled as follows: 

(1) The disclosure of privileged or 

protected information or 

communications shall not operate as a 

waiver with respect to the Bureau if: 

(i) The disclosure was inadvertent; 

(ii) The holder of the privilege or 

protection took reasonable steps to 

prevent disclosure; and 

(iii) The holder promptly took 

reasonable steps to rectify the error, 

including notifying a Bureau 

investigator of the claim of privilege or 

protection and the basis for it. 

(2) After being notified, the Bureau 

investigator must promptly return, 

sequester, or destroy the specified 

information and any copies; must not 

use or disclose the information until the 

claim is resolved; must take reasonable 

steps to retrieve the information if he or 

she disclosed it before being notified; 

and, if appropriate, may sequester such 

material until such time as a hearing 

officer or court rules on the merits of the 

claim of privilege or protection. The 

producing party must preserve the 

information until the claim is resolved. 

(3) The disclosure of privileged or 

protected information or 

communications shall waive the 

privilege or protection with respect to 

the Bureau as to undisclosed 

information or communications only if: 

(i) The waiver is intentional; 

(ii) The disclosed and undisclosed 

information or communications concern 

the same subject matter; and 

(iii) They ought in fairness to be 

considered together. 


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§ 1080.9 Rights of witnesses in 

investigations. 

(a) Any person compelled to submit 

documentary material, tangible things, 

or written reports or answers to 

questions to the Bureau, or to testify in 

an investigational hearing, shall be 

entitled to retain a copy or, on payment 

of lawfully prescribed costs, request a 

copy of the materials, things, reports, or 

written answers submitted, or a 

transcript of his or her testimony. The 

Bureau, however, may for good cause 

deny such a request and limit the 

witness to inspection of the official 

transcript of the testimony. Upon 

completion of transcription of the 

testimony of the witness, the witness 

shall be offered an opportunity to read 

the transcript of his or her testimony. 

Any changes by the witness shall be 

entered and identified upon the 

transcript by the Bureau investigator 

with a statement of the reasons given by 

the witness for making such changes. 

The transcript shall then be signed by 

the witness and submitted to the Bureau 

unless the witness cannot be found, is 

ill, waives in writing his or her right to 

signature, or refuses to sign. If the 

signed transcript is not submitted to the 

Bureau within 30 calendar days of the 

witness being afforded a reasonable 

opportunity to review it, the Bureau 

investigator, or the individual 

transcribing the testimony acting at the 

Bureau investigator’s direction, shall 

sign the transcript and state on the 

record the fact of the waiver, illness, 

absence of the witness, or the refusal to 

sign, together with any reasons given for 

the failure to sign. 

(b) Any witness compelled to appear 

in person at an investigational hearing 

may be accompanied, represented, and 

advised by counsel as follows: 

(1) Counsel for a witness may advise 

the witness, in confidence and upon the 

initiative of either counsel or the 

witness, with respect to any question 

asked of the witness where it is claimed 

that a witness is privileged to refuse to 

answer the question. Counsel may not 

otherwise consult with the witness 

while a question directed to the witness 

is pending. 

(2) Any objections made under the 

rules in this part shall be made only for 

the purpose of protecting a 

constitutional or other legal right or 

privilege, including the privilege against 

self-incrimination. Neither the witness 

nor counsel shall otherwise object or 

refuse to answer any question. Any 

objection during an investigational 

hearing shall be stated concisely on the 

record in a nonargumentative and 

nonsuggestive manner. Following an 

objection, the examination shall proceed 

and the testimony shall be taken, except 

for testimony requiring the witness to 

divulge information protected by the 

claim of privilege or work product. 

(3) Counsel for a witness may not, for 

any purpose or to any extent not 

allowed by paragraphs (b)(1) and (2) of 

this section, interrupt the examination 

of the witness by making any objections 

or statements on the record. Petitions 

challenging the Bureau’s authority to 

conduct the investigation or the 

sufficiency or legality of the civil 

investigative demand shall be addressed 

to the Bureau in advance of the hearing 

in accordance with § 1080.6(e). Copies 

of such petitions may be filed as part of 

the record of the investigation with the 

Bureau investigator conducting the 

investigational hearing, but no 

arguments in support thereof will be 

allowed at the hearing. 

(4) Following completion of the 

examination of a witness, counsel for 

the witness may, on the record, request 

that the Bureau investigator conducting 

the investigational hearing permit the 

witness to clarify any of his or her 

answers. The grant or denial of such 

request shall be within the sole 

discretion of the Bureau investigator 

conducting the hearing. 

(5) The Bureau investigator 

conducting the hearing shall take all 

necessary action to regulate the course 

of the hearing to avoid delay and to 

prevent or restrain disorderly, dilatory, 

obstructionist, or contumacious 

conduct, or contemptuous language. 

Such Bureau investigator shall, for 

reasons stated on the record, 

immediately report to the Bureau any 

instances where an attorney has 

allegedly refused to comply with his or 

her obligations under the rules in this 

part, or has allegedly engaged in 

disorderly, dilatory, obstructionist, or 

contumacious conduct, or 

contemptuous language in the course of 

the hearing. The Bureau will thereupon 

take such further action, if any, as the 

circumstances warrant, including 

actions consistent with those described 

in 12 CFR 1081.107(c) to suspend or 

disbar the attorney from further practice 

before the Bureau or exclude the 

attorney from further participation in 

the particular investigation. 

§ 1080.10 Noncompliance with civil 

investigative demands. 

(a) In cases of failure to comply in 

whole or in part with Bureau civil 

investigative demands, appropriate 

action may be initiated by the Bureau, 

including actions for enforcement. 

(b) The Director, the Assistant 

Director of the Office of Enforcement, 

and the General Counsel of the Bureau 

are authorized to: 

(1) Institute, on behalf of the Bureau, 

an enforcement proceeding in the 

district court of the United States for 

any judicial district in which a person 

resides, is found, or transacts business, 

in connection with the failure or refusal 

of such person to comply with, or to 

obey, a civil investigative demand in 

whole or in part if the return date or any 

extension thereof has passed; and 

(2) Seek civil contempt or other 

appropriate relief in cases where a court 

order enforcing a civil investigative 

demand has been violated. 

§ 1080.11 Disposition. 

(a) When the facts disclosed by an 

investigation indicate that an 

enforcement action is warranted, further 

proceedings may be instituted in 

Federal or State court or pursuant to the 

Bureau’s administrative adjudicatory 

process. Where appropriate, the Bureau 

also may refer investigations to 

appropriate Federal, State, or foreign 

governmental agencies. 

(b) When the facts disclosed by an 

investigation indicate that an 

enforcement action is not necessary or 

would not be in the public interest, the 

investigational file will be closed. The 

matter may be further investigated, at 

any time, if circumstances so warrant. 

(c) The Assistant Director of the Office 

of Enforcement and the Deputy 

Assistant Directors of the Office of 

Enforcement are authorized to close 

Bureau investigations. 

§ 1080.12 Orders requiring witnesses to 

testify or provide other information and 

granting immunity. 

The Director has the nondelegable 

authority to request approval from the 

Attorney General of the United States 

for the issuance of an order requiring a 

witness to testify or provide other 

information and granting immunity 

under 18 U.S.C. 6004. 

§ 1080.13 Custodians. 

(a) The Bureau shall designate a 

custodian and one or more deputy 

custodians for material to be delivered 

pursuant to a civil investigative demand 

in an investigation. The custodian shall 

have the powers and duties prescribed 

by 12 CFR 1070.3 and section 1052 of 

the Act, 12 U.S.C. 5562. Deputy 

custodians may perform all of the duties 

assigned to custodians. 

(b) Material produced pursuant to a 

civil investigative demand, while in the 

custody of the custodian, shall be for the 

official use of the Bureau in accordance 

with the Act; but such material shall 

upon reasonable notice to the custodian 


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be made available for examination by 

the person who produced such material, 

or his or her duly authorized 

representative, during regular office 

hours established for the Bureau. 

§ 1080.14 Confidential treatment of 

demand material and non-public nature of 

investigations. 

(a) Documentary materials, written 

reports, answers to questions, tangible 

things or transcripts of oral testimony 

the Bureau receives in any form or 

format pursuant to a civil investigative 

demand are subject to the requirements 

and procedures relating to the 

disclosure of records and information 

set forth in part 1070 of this title. 

(b) Bureau investigations generally are 

non-public. Bureau investigators may 

disclose the existence of an 

investigation to potential witnesses or 

third parties to the extent necessary to 

advance the investigation. 

Dated: June 4, 2012. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2012–14047 Filed 6–28–12; 8:45 am] 

BILLING CODE 4810–AM–P 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1082 

[Docket No. CFPB–2011–0005] 

RIN 3170–AA02 

State Official Notification Rule 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

SUMMARY: The Dodd-Frank Wall Street 

Reform and Consumer Financial 

Protection Act of 2010 (Dodd-Frank Act) 

requires the Bureau of Consumer 

Financial Protection (Bureau) to 

prescribe rules establishing procedures 

that govern the process by which State 

Officials notify the Bureau of actions 

undertaken pursuant to the authority 

granted to the States to enforce the 

Dodd-Frank Act or regulations 

prescribed thereunder. This final State 

Official Notification Rule (Final Rule) 

sets forth the procedures to govern this 

process. 

DATES: The Final Rule is effective June 

29, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Veronica Spicer, Office of Enforcement, 

Consumer Financial Protection Bureau, 

1700 G Street NW., Washington, DC 

20552, at (202) 435–7545. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Dodd-Frank Wall Street Reform 

and Consumer Financial Protection Act 

of 2010 (Dodd-Frank Act) was signed 

into law on July 21, 2010. Title X of the 

Dodd-Frank Act established the Bureau 

to regulate the offering and provision of 

consumer financial products or services 

under the Federal consumer financial 

laws. Section 1042 of the Dodd-Frank 

Act, 12 U.S.C. 5552, governs the 

enforcement powers of the States under 

the Dodd-Frank Act. Under section 

1042(a), a State attorney general or 

regulator (State Official) may bring an 

action to enforce Title X of the DoddFrank Act and regulations issued 

thereunder. Prior to initiating any such 

action, the State Official is required to 

provide notice of the action to the 

Bureau and the prudential regulator, if 

any, pursuant to section 1042(b) of the 

Dodd-Frank Act. Section 1042(b) further 

authorizes the Bureau to intervene in 

the State Official’s action as a party, 

remove the action to a Federal district 

court, and appeal any order or 

judgment. 

Pursuant to section 1042(c) of the 

Dodd-Frank Act, the Bureau is required 

to issue regulations implementing the 

requirements of section 1042. On July 

28, 2011, the Bureau promulgated the 

State Official Notification Rule (Interim 

Final Rule) with a request for comment. 

The comment period for the Interim 

Final Rule ended on September 26, 

2011. After reviewing and considering 

the issues raised by the comments, the 

Bureau now promulgates the Final Rule 

establishing a procedure for the timing 

and content of the notice required to be 

provided by State Officials pursuant to 

section 1042(b) of the Dodd-Frank Act, 

12 U.S.C. 5552(b). 

II. Summary of the Final Rule 

Like the Interim Final Rule, the Final 

Rule implements a procedure for the 

timing and content of the notice 

required by section 1042(b), sets forth 

the responsibilities of the recipients of 

the notice, and specifies the rights of the 

Bureau to participate in actions brought 

by State Officials under section 1042(a) 

of the Dodd-Frank Act. In drafting the 

Final Rule, the Bureau endeavored to 

create a process that would provide both 

the Bureau and, where applicable, the 

prudential regulators with timely notice 

of pending actions and account for the 

investigation and litigation needs of 

State regulators and law enforcement 

agencies. In keeping with this approach, 

the Final Rule provides for a default 

notice period of at least ten calendar 

days, with exceptions for emergencies 

and other extenuating circumstances, 

and requires substantive notice that is 

both straightforward and 

comprehensive. The Final Rule further 

makes clear that the Bureau can 

intervene as a party in an action brought 

by a State Official under Title X of the 

Dodd-Frank Act or a regulation 

prescribed thereunder, provides for the 

confidential treatment of non-public 

information contained in the notice if a 

State so requests, and provides that 

provision of notice shall not be deemed 

a waiver of any applicable privilege. In 

addition, the Final Rule specifies that 

the notice provisions do not create any 

procedural or substantive rights for 

parties in litigation against the United 

States or against a State that brings an 

action under Title X of the Dodd-Frank 

Act or a regulation prescribed 

thereunder. 

III. Legal Authority 

Section 1042(c) of the Dodd-Frank Act 

authorizes the Bureau to prescribe 

regulations implementing the 

requirements of section 1042(b). In 

addition, the Bureau has general 

rulemaking authority pursuant to 

section 1022(b)(1) of the Dodd-Frank 

Act to prescribe rules to enable the 

Bureau to administer and carry out the 

purposes and objectives of the Federal 

consumer financial laws and to prevent 

evasions thereof. 

IV. Overview of Comments Received 

In response to the Interim Final Rule, 

the Bureau received several comments. 

Four letters were received from 

associations representing the financial 

industry, two letters were received from 

financial industry regulators and 

supervisors, and one letter was received 

from an individual consumer. The 

Bureau also received a comment letter 

from a financial industry regulator in 

response to its Federal Register 

notification of November 21, 2011, 

regarding the information collection 

requirements associated with the 

Interim Final Rule pursuant to the 

Paperwork Reduction Act of 1995 

(PRA), Public Law 104–13. All of the 

comments are available for review on 

www.regulations.gov. 

The financial industry associations’ 

comments fell into several general 

categories. Several comments expressed 

concerns about the Bureau’s ability to 

maintain confidentiality for notification 

materials received by the Bureau. Other 

commenters requested clarity as to the 

type of actions for which the Bureau 

requires notification. One commenter 

requested that the Bureau require 

uniform interpretation by States of all 

Federal law within the Bureau’s 

jurisdiction. 


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