A regulatory settlement is an agreement between a defendant and a regulatory body, such as the Federal Trade Commission (FTC), the Department of Justice (DOJ), or the Department of Labor (DOL), to bring a formal investigation to an end. A regulatory settlement is not a class action lawsuit.
State regulatory agreements can be settled with an Assurance of Discontinuance, while federal regulatory agreements are settled with a Consent Order. A regulatory settlement offers flexibility beyond normal disciplinary sanctions. The regulated entity may agree to pay compensation directly to its customers or agree to accept operational changes and increased reporting to the regulatory agency. In many cases, a regulatory settlement can resolve the matter — in whole or at least in part — to the benefit of all parties.
Best practices for regulatory settlementsinclude:
Our team provides robust regulatory settlement services to satisfy the most complex government enforcement actions. In 2013, we assisted Ally Financial Inc. implement their Consent Orders with the Consumer Financial Protection Bureau and the Civil Rights Division of the Department of Justice after Ally was alleged to have violated the Equal Credit Opportunity Act through its auto loan lending practices. With no admission of wrongdoing, Ally chose to enter in a settlement to avoid contested litigation while continuing to serve their customers. They agreed to pay $80 million in damages and agreed to accept various types of Injunctive Relief.
In administering these Consent Orders, our team-