AR Mortgage Regulation

Arkansas Joins $20M Multistate Settlement with Bayview Over Data Breach

The Arkansas Securities Department joined 52 state financial regulatory agencies in a $20 million settlement with Bayview Asset Management LLC and three affiliates (Lakeview Loan Servicing, Community Loan Servicing, and Pingora Holdings) for deficient cybersecurity practices and failing to comply with examination authority following a data breach impacting 5.8 million customers. This is the first collective multistate enforcement action by state regulators for a mortgage company data breach. In addition to the monetary penalty, the Bayview Companies must implement corrective actions, undergo independent assessments, and provide three years of additional reporting to states.

Arkansas Joins $17M Multi-State Edward Jones Settlement

The Arkansas Securities Department joined a $17 million multi-state settlement with Edward D. Jones & Co., L.P. for supervisory failures related to Class A mutual fund share commissions and fee-based investment advisory accounts. A 14-state working group led by Arkansas found gaps in Edward Jones's supervision of customers moving from brokerage to advisory accounts, particularly where customers paid front-load commissions and later moved assets sooner than anticipated. Edward Jones will pay approximately $320,000 to each of 51 jurisdictions, with Arkansas receiving an additional $15,000 for administrative and investigatory costs.

Block Inc Cash App $80M BSA/AML Multistate Settlement

The Arkansas Securities Department joined 47 state financial regulatory agencies in a coordinated $80 million enforcement action against Block, Inc. (Cash App) for Bank Secrecy Act (BSA) and anti-money laundering (AML) violations. State regulators found Block's services were not in compliance with customer due diligence, suspicious activity reporting, and high-risk account controls requirements, creating potential for money laundering and terrorism financing. As part of the settlement, Block must hire an independent consultant to review its BSA/AML program and correct any deficiencies within 12 months of the consultant's report.

Vanguard Pays $106M Multi-State Settlement Over Target-Date Fund Tax Disclosure Failures

The Arkansas Securities Department joined a multi-state task force and the SEC in a $106 million settlement with Vanguard Marketing Corporation and The Vanguard Group for failing to supervise registered persons and failing to disclose potential tax consequences to investors following a December 2020 change in investment minimums for certain target date retirement funds. The investigation found that Vanguard lowered investment minimums for Institutional Target Retirement Funds, causing mass redemptions from Investor TRFs that triggered significant capital gains taxes for hundreds of thousands of retail investors remaining in the Investor TRFs. The SEC will administer remediation payments to affected Arkansas investors through its Fair Fund program.

Patrick Donlon Barred, Fined $31k for SAFE Act Education Fraud

Arkansas Securities Department and 20 other state financial agencies settled with mortgage loan officer Patrick Terrance Donlon (NMLS 785311) for directing another person to complete required SAFE Act education on his behalf. Donlon is permanently barred from licensure in participating states, restricted in Colorado and Florida, and fined $31,000 total. He was also removed as Qualified Individual and Control Person of Trusted American Mortgage LLC.