insideARM Weekly Recap - Week of September 30th, 2024

We know that ARM industry professionals are pressed for time. This is why the editorial team at insideARM sifts through all the news and highlights only the most important stories each week. Read on for a breakdown of these stories and why we think you need to know about them.

To kick off the week, we reported that the number of securities class actions involving AI-related allegations is on the rise, with at least 11 cases emerging in 2024. This trend coincides with growing SEC interest in regulating AI-specific disclosures, as seen in proposed rules and recent enforcement actions targeting companies making misleading statements about their AI capabilities. Companies should ensure their public statements on AI have a solid foundation, and boards should involve audit or risk committees in overseeing AI usage and related disclosures. Additionally, risk disclosures should be tailored to the company and industry to mitigate potential legal exposure. 

On Wednesday, we shared an update from the CFPB. It initiated a public comment process for the first application from an organization seeking recognition as an open banking standard-setter, following the final rule issued in June 2024. Standard setters will play a key role in ensuring compliance with the forthcoming Personal Financial Data Rights Rule under Section 1033 of the Consumer Financial Protection Act. Applicants must demonstrate openness, transparency, balanced decision-making, consensus, and due process. The CFPB is currently reviewing an application from the Financial Data Exchange (FDX) and is inviting public feedback before finalizing the decision. 

Finally, starting October 16, large-market participants in the ARM industry under enforcement orders from the CFPB or other agencies must submit company information and copies of their orders to the CFPB's Nonbank Registry. The CFPB's 71-page Nonbank Registration Filing Instructions Guide helps companies prepare for accurate registration by outlining necessary details such as legal identifiers and enforcement order information. The registry site requires submissions to be completed in one sitting, as incomplete entries are not saved, and re-entering information may require assistance from the CFPB helpdesk. This process is burdensome, especially considering that most of the information requested is already publicly available, and annual reviews and updates may be necessary. The CFPB offers free training on registration, with the next session on October 9. 

As always, we thank you for reading the weekly recap to stay on top of this ever-changing industry! For a breakdown of the week of September 23rd, click here.  

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