Petitions to Modify or Set Aside CFPB Civil Investigative Demands: Analysis of Recent Decisions

by Amanda M. Raines and A.J. Dhaliwal

Amanda M. Raines and A.J. Dhaliwal, of BuckleySandler LLP, discuss how the power of civil investigative demands (CIDs) has been brought into focus by two Consumer Financial Protection Bureau (CFPB) decisions denying petitions to modify or set aside CIDs and how those decisions provide guidance for parties assessing whether to challenge the CFPB's request for documents and responses. Topics include the importance of meet-and-confer sessions.

Excerpt:

Since the Consumer Financial Protection Bureau (CFPB or Bureau) came on line in July 2011, it has been aggressively investigating whether financial institutions and service providers, among others, have been engaging in conduct that, if proven, violates a Federal consumer financial law. Among the many tools in the CFPB's investigative arsenal are civil investigative demands (CIDs).

While the use of CIDs in regulatory investigations is nothing new, the power of CIDs has been brought into focus by two recent CFPB decisions denying petitions to modify or set aside CIDs. These decisions provide guidance for parties assessing whether to challenge the CFPB's request for documents and responses. In this article, we analyze the reasoning behind these decisions and identify issues that companies must be cognizant of while navigating the investigation and petitioning phases.

The CFPB's Rules Regarding CIDs

Section 1052 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) and the CFPB's final Rules Relating to Investigations (Final Rules) set forth the parameters that govern the Bureau's investigations. Under Section 1052(c), "[w]henever the Bureau has reason to believe that any person may be in possession, custody, or control of any documentary material or tangle things, or may have any information, relevant to a violation," the Bureau may issue a CID. CIDs can be issued to compel documentary material, tangible things, written reports, answers to questions, and oral testimony.

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Amanda M. Raines represents financial services industry clients in federal and state enforcement agency investigations and litigation, as well as in private civil and class action litigation. She has represented clients in investigations by the Department of Justice, the SEC, the FDIC, and state attorneys general, as well as in private class action litigation involving securities fraud, tax fraud, the Fair Housing Act, the Equal Credit Opportunity Act, the Civil Rights Act, and unfair and deceptive trade practices statutes. Ms. Raines received her J.D. from Case Western Reserve University School of Law, where she was the managing editor of the Case Western Law Review.

Amanjot ("A.J.") Singh Dhaliwal is an associate in the Washington DC, office of BuckleySandler LLP. He assists financial services clients in litigation, regulatory and compliance matters, and counsels clients on federal laws including the Fair Credit Reporting Act, the Fair Debt Collections Practices Act, the Real Estate Settlement Procedures Act, and the Truth in Lending Act. He is the Immediate Past-President of the South Asian Bar Association of Washington DC (SABA-DC). He received his LL.M. from The George Washington University Law School, where he focused on international business transactions and trade law.