DISB issues bulletin on payday lending
DISB recently issued a Banking Bulletin* to payday lenders in the District, instructing them to either cease any further activity or be re-licensed and comply with the 24 percent interest ceiling. (See longer article in the Special Business Feature of this newsletter.)

Proposed IRS Regulation Could Impact Captives’ Tax Treatment
A proposed regulation from the Internal Revenue Service would provide new guidance regarding the treatment of transactions between members of a consolidated group, including captive insurance company arrangements, according to published reports. If the proposed regulation becomes effective it could significantly impact the tax treatment of premium payments to US-based captives and non-US captives that have elected to be taxed as US corporations. Captive companies’ tax and legal advisors can provide more information on the potential impact. For more information and a copy of the proposed regulation, please visit the website for the Captive Insurance Council of the District of Columbia at dccaptives.com. Written comments are invited by December 27, 2007, to CC:PA:LPD:PR (REG-107592-00), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044 or electronically via the Federal eRulemaking Portal at regulations.gov (IRS REG-107592-00).

State Securities Regulators Update Best Practices to Help Advisers Strengthen Compliance Procedures
The North American Securities Administrators Association (NASAA) recently released an updated series of recommended best practices that investment advisers should consider to improve their compliance practices and procedures. The best practices were developed to help regulators and advisers better understand and meet compliance challenges, according to NASAA president and North Dakota Securities Commissioner Karen Tyler. The hope is for advisers to use this information to help strengthen compliance programs and minimize the potential for regulatory violations. Strong compliance programs are an integral ingredient in building and maintaining investor confidence.

Tyler said the best practices were developed after a nationwide series of coordinated examinations of investment advisers by 43 state and provincial securities examiners revealed a significant number of problem areas. She said 418 examinations of investment advisers were conducted between January 1, 2007 and May 31, 2007, and they revealed 2,135 deficiencies in 13 compliance areas. Tyler noted that the 2007 examinations found a 12 and 19 percent increase respectively in advisers with registration and books and records deficiencies. The top five categories with the greatest number of deficiencies identified in the examinations involved registration, unethical business practices, books and records, supervisory/compliance and privacy. Other areas with deficiencies included the preparation and maintenance of financial records, advertising, fees, custody, investment activities, solicitors, performance reporting and hedge funds. NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, Canada and Mexico.

DISB Fraud Investigator Recognized
DISB Fraud Investigator Jeremiah Smith with the Enforcement and Investigation Bureau received the Maryland Governors Award for Service at the Maryland-District of Columbia Anti Car Thefts’ annual meeting on October 18.  Maryland’s Attorney General Douglas F. Gansler presented the award to Smith to recognize his efforts with regional law enforcement to resolve consumer complaints regarding tow trucks, towing storage and other insurance auto fraud issues for the residents of the metropolitan area. In addition, Smith was the District nominee for the FY 2007 Annual William Reeder Award, which recognizes outstanding service from the public sector. Smith has been instrumental to DISB’s visibility in assisting the public in the tow truck-storage fraud.

NAIC Commends Passage of Terrorism Risk Insurance Legislation
The National Association of Insurance Commissioners (NAIC), of which DISB is a member, recently commended the U.S. Congress for passing legislation to extend the federal Terrorism Risk Insurance Program for another seven years. According to NAIC president and Kansas Insurance Commissioner Sandy Praeger, in the absence of a private market, the program provides essential coverage for policyholders and maintains a crucial safety net for the national economy.

NAIC recognized House Financial Services Committee chair Barney Frank (D-Ma.) and Senate Banking Committee Chairman Christopher J. Dodd (D-Ct.), as well as Sen. Richard Shelby (R-Ala.), Rep. Spencer Bachus (R-Ala.) and Rep. Mike Capuano (D-Ma.) for resolving outstanding differences and passing the legislation before the legislation expired December 31, 2007. While Congress has agreed on reauthorization language, the bill must still be signed into law by President George W. Bush before year’s end to ensure economic stability. Once enacted, the NAIC will work with the U.S. Department of Treasury and the insurance industry to quickly implement this critical program.

Public Forum on Universal Health Coverage
On November 15, DISB and the DC Department of Health (DOH) co-hosted a public forum on universal health coverage, during which Commissioner Thomas E. Hampton discussed DISB’s key initiatives in helping reduce the District’s uninsured population, such as a feasibility study on the creation and initial operation of a qualified high-risk pool for the District’s uninsurable population. The study would establish a mechanism for the District of Columbia to provide services to medically uninsurable District residents. Several other experts were invited to discuss the subject of universal health coverage. This was a key program for the District’s first Health Insurance Awareness Month in November, which also included the creation of a one-stop website on health coverage in the District.

DISB Enhances its Law Enforcement Network
DISB recently joined two networks expected to enhance its fraud-fighting efforts. The agency’s Enforcement and Investigation Bureau became a member of the newly formed FBI Mortgage Fraud Task Force to look into over-valued home prices. The task force is a regional network of federal, state and local investigators headed by the FBI Washington Regional Office to target mortgage fraud in the area. The bureau also became a member of the Financial Crimes Enforcement Network whose federal, state and local law enforcement members review reports from financial institutions for suspicious money transfer activities in the DC area. The expanded partnership gives the agency a broader purview over various financial crimes in the District.