In a speech last week to the Reuters Washington Summit, Director Cordray is reported to have indicated that the CFPB is committed to pursuing individuals, and not just companies, when exercising its enforcement authority. Mr. Cordray reportedly said that “[c]ompanies run through individuals, and individuals need to know that they’re at risk when they do bad things under the umbrella of a company.”
The same report stated that Mr. Cordray had also indicated that the CFPB is now seeking admissions of wrongdoing from enforcement targets. This past June, we reported that the SEC had changed its policy to more frequently require an admission of wrongdoing from defendants as a condition of settlement. At that time, we observed that Senator Elizabeth Warren’s role as a leading critic of the SEC’s “neither admit nor deny” policy might cause the CFPB to be more favorably disposed to making a similar change. Because of the difficulty that defendants in enforcement actions may face by admitting any wrongdoing, the CFPB’s apparent decision to adopt the SEC’s new policy could be an obstacle for many companies in reaching settlements with the CFPB.
The CFPB has already named individuals as defendants in two RESPA enforcement matters involving affiliated business arrangements (one matter was settled in May and the other was filed last week) and in two mortgage modification enforcement matters, one against the Gordon Law Firm and the other against National Legal Help Center. In these matters, there have been no admissions of wrongdoing by the individuals who have agreed to settlements.