:~J? GP'9'
`
`Page 1957
`
`TITLE 12---BANKS AND BANKING
`
`§5537
`
`cation and with institutions of higher edu(cid:173)
`cation, lenders, guaranty agencies, loan serv(cid:173)
`icers, and other participants in private edu(cid:173)
`cation loan programs;
`(2) not later than 90 days after the des(cid:173)
`ignated transfer date, establish a memoran(cid:173)
`dum of understanding with the student loan
`ombudsman established under section 1018(0
`of title 20, to ensure coordination in providing
`assistance to and serving borrowers seeking to
`resolve complaints related to their private
`education or Federal student loans;
`(3) compile and analyze data on borrower
`complaints regarding private education loans;
`and
`(4) make appropriate recommendations to
`the Director, the Secretary, the Secretary of
`Education, the Committee on Banking, Hous(cid:173)
`ing, and Urban Affairs and the Committee on
`Health, Education, Labor, and Pensions of the
`Senate and the Committee on Financial Serv(cid:173)
`ices and the Committee on Education and
`Labor of the House of Representatives.
`(d) Annual reports
`(1) In general
`The Ombudsman shall prepare an annual re(cid:173)
`port that describes the activities, and evalu(cid:173)
`ates the effectiveness of the Ombudsman dur(cid:173)
`ing the preceding year.
`(2) Submission
`The report required by paragraph (1) shall be
`submitted on the same date annually to the
`Secretary, the Secretary of Education, the
`Committee on Banking, Housing, and Urban
`Affairs and the Committee on Health, Edu(cid:173)
`cation, Labor, and Pensions of the Senate and
`the Committee on Financial Services and the
`Committee on Education and Labor of the
`House of Representatives.
`(e) Definitions
`For purposes of this section, the terms " pri(cid:173)
`vate education loan" and "institution of higher
`education" have the same meanings as in sec(cid:173)
`tion 1650 of title 15.
`(Pub. L. 111-203, title X, § 1035, July 21, 2010, 124
`Stat. 2009.)
`
`EFFECTIVE DATE
`Section effective on the designated transfer date, see
`section 1037 of Pub. L. 111-203, set out as a note under
`section 5531 of this title.
`
`§ 5536. Prohibited acts
`(a) In general
`It shall be unlawful for-
`(1) any covered person or service provider-
`(A) to offer or provide to a consumer any
`financial product or service not in conform(cid:173)
`ity with Federal consumer financial law, or
`otherwise commit any act or omission in
`violation of a Federal consumer financial
`law; or
`(B) to engage in any unfair, deceptive, or
`abusive act or practice;
`(2) any covered person or service provider to
`fail or refuse, as required by Federal consumer
`financial law, or any rule or order issued by
`the Bureau thereunder-
`
`(A) to permit access to or copying of
`records;
`(B) to establish or maintain records; or
`(C) to make reports or provide information
`to the Bureau; or
`(3) any person to knowingly or recklessly
`provide substantial assistance to a covered
`person or service provider in violation of the
`provisions of section 5531 of this title, or any
`rule or order issued thereunder, and notwith(cid:173)
`standing any provision of this title ,1 the pro(cid:173)
`vider of such substantial assistance shall be
`deemed to be in violation of that section to
`the same extent as the person to whom such
`assistance is provided.
`(b) Exception
`No person shall be held to have violated sub(cid:173)
`section (a)(1) solely by virtue of providing or
`selling time or space to a covered person or serv(cid:173)
`ice provider placing an advertisement.
`(Pub. L. 111-203, title X, § 1036, July 21, 2010, 124
`Stat. 2010.)
`
`REFERENCES rn TEXT
`This title, where footnoted in subsec. (a)(3), is title X
`of Pub. L . 111-203, July 21, 2010, 124 Stat. 1955, known as
`the Consumer Financial Protection Act of 2010, which
`enacted this subchapter and enacted, amended, andre(cid:173)
`pealed numerous other sections and notes in the Code.
`For complete classification of title X to the Code, see
`Short Title note set out under section 5301 of this title
`and Tables.
`
`EFFECTIVE DATE
`Section effective on the designated transfer date, see
`section 1037 of Pub. L. 111-203, set out as a note under
`section 5531 of this title.
`
`§5537. Senior investor protections
`(a) Definitions
`As used in this section-
`(1) the term "eligible entity" means-
`(A) a securities commission (or any agency
`or office performing like functions) of a
`State that the Office determines has adopted
`rules on the appropriate use of designations
`in the offer or sale of securities or the provi(cid:173)
`sion of investment advice that meet or ex(cid:173)
`ceed the minimum requirements of the
`NASAA Model Rule on the Use of Senior(cid:173)
`Specific Certifications and Professional Des(cid:173)
`ignations (or any successor thereto);
`(B)
`the insurance commission (or any
`agency or office performing like functions)
`of any State that the Office determines
`has-
`(i) adopted rules on the appropriate use
`of designations in the sale of insurance
`products that, to the extent practicable,
`conform to the minimum requirements of
`the National Association of Insurance
`Commissioners Model Regulation on the
`Use of Senior-Specific Certifications and
`Professional Designations in the Sale of
`Life Insurance and Annuities (or any suc(cid:173)
`cessor thereto); and
`(ii) adopted rules with respect to fidu(cid:173)
`ciary or suitability requirements in the
`
`1 See References In Text note below.
`
`VERSATA EXHIBIT 2048
`SAP v. VERSATA
`CASE CBM2012-00001
`
`

`
`§5537
`
`TITLE 12-BANKS AND BANKING
`
`Page 1958
`
`sale of annuities that meet or exceed the
`minimum requirements established by the
`Suitability in Annuity Transactions Model
`Regulation of the National Association of
`Insurance Commissioners (or any succes(cid:173)
`sor thereto); or
`(C) a consumer protection agency of any
`State, if-
`(i) the securities commission (or any
`agency or office performing like functions)
`of the State is eligible under subparagraph
`(A); or
`(11) the insurance commission (or any
`agency or office performing like functions)
`of the State is eligible under subparagraph
`(B);
`(2) the term "financial product" means a se(cid:173)
`curity, an insurance product (including an in(cid:173)
`surance product that pays a return, whether
`fixed or variable), a bank product, and a loan
`product;
`(3) the term "misleading designation"-
`(A) means a certification, professional des(cid:173)
`ignation, or other purported credential that
`indicates or implies that a salesperson or ad(cid:173)
`viser has special certification or training in
`advising or servicing seniors; and
`(B) does not include a certification, profes(cid:173)
`sional designation, license, or other creden(cid:173)
`tial that-
`(i) was issued by or obtained from an
`academic institution having regional ac(cid:173)
`creditation;
`the standards for certifi(cid:173)
`(11) meets
`cations and professional designations out(cid:173)
`lined by the NASAA Model Rule on the
`Use of Senior-Specific Certifications and
`Professional Designations (or any succes(cid:173)
`sor thereto) or by the Model Regulations
`on
`the Use of Senior-Specific Certifi(cid:173)
`cations and Professional Designations in
`the Sale of Life Insurance and Annuities,
`adopted by the National Association of In(cid:173)
`surance Commissioners (or any successor
`thereto); or
`(111) was issued by or obtained from a
`State;
`(4) the term "misleading or fraudulent mar(cid:173)
`keting" means the use of a misleading des(cid:173)
`ignation by a person that sells to or advises a
`senior in connection with the sale of a finan(cid:173)
`cial product;
`(5) the term "NASAA" means the North
`American Securities Administrators Associa(cid:173)
`tion;
`(6) the term "Office" means the Office of Fi(cid:173)
`nancial Literacy of the Bureau;
`(7) the term "senior" means any individual
`who has attained the age of 62 years or older;
`and
`(8) the term "State" has the same meaning
`as in section 78c(a) of title 15.
`(b) Grants to States for enhanced protection of
`seniors from being misled by false designa(cid:173)
`tions
`The Office shall establish a program under
`which the Office may make grants to States or
`eligible entities-
`(1) to hire staff to identify, investigate, and
`prosecute (through civil, administrative, or
`
`criminal enforcement actions) cases involving
`misleading or fraudulent marketing;
`(2) to fund technology, equipment, and train(cid:173)
`ing for regulators, prosecutors, and law en(cid:173)
`forcement officers, in order to identify sales(cid:173)
`target seniors
`persons and advisers who
`through the use of misleading designations;
`(3) to fund technology, equipment, and train(cid:173)
`ing for prosecutors to increase the successful
`prosecution of salespersons and advisers who
`target seniors with the use of misleading des(cid:173)
`ignations;
`(4) to provide educational materials and
`training to regulators on the appropriateness
`of the use of designations by salespersons and
`advisers in connection with the sale and mar(cid:173)
`keting of financial products;
`(5) to provide educational materials and
`training to seniors to increase awareness and
`understanding of misleading or fraudulent
`marketing;
`(6) to develop comprehensive plans to com(cid:173)
`bat misleading or fraudulent marketing of fi(cid:173)
`nancial products to seniors; and
`(7) to enhance provisions of State law to pro(cid:173)
`vide protection for seniors against misleading
`or fraudulent marketing.
`(c) Applications
`A State or eligible entity desiring a grant
`under this section shall submit an application to
`the Office, in such form and in such a manner as
`the Office may determine, that includes-
`(1) a proposal for activities to protect sen(cid:173)
`iors from misleading or fraudulent marketing
`that are proposed to be funded using a grant
`under this section, including-
`(A) an identification of the scope of the
`problem of misleading or fraudulent market(cid:173)
`ing in the State;
`(B) a description of how the proposed ac(cid:173)
`tivities would-
`(i) protect seniors from misleading or
`fraudulent marketing in the sale of finan(cid:173)
`cial products, including by proactively
`identifying victims of misleading and
`fraudulent marketing who are seniors;
`(11) assist in the investigation and pros(cid:173)
`ecution of those using misleading or fraud(cid:173)
`ulent marketing; and
`(i11) discourage and reduce cases of mis(cid:173)
`leading or fraudulent marketing; and
`(C) a description of how the proposed ac(cid:173)
`tivities would be coordinated with other
`State efforts; and
`(2) any other information, as the Office de(cid:173)
`termines is appropriate.
`(d) Performance objectives and reporting re(cid:173)
`quirements
`The Office may establish such performance ob(cid:173)
`jectives and reporting requirements for States
`and eligible entities receiving a grant under this
`section as the Office determines are necessary to
`carry out and assess the effectiveness of the pro(cid:173)
`gram under this section.
`(e) Maximum amount
`The amount of a grant under this section may
`not exceed-
`(1) $500,000 for each of 3 consecutive fiscal
`years, if the recipient is a State, or an eligible
`entity of a State, that has adopted rules-
`
`

`
`Page 1959
`
`TITLE 12--BANKS AND BANKING
`
`§5538
`
`(A) on the appropriate use of designations
`in the offer or sale of securities or invest(cid:173)
`ment advice that meet or exceed the mini(cid:173)
`mum requirements of the NASAA Model
`Rule on the Use of Senior-Specific Certifi(cid:173)
`cations and Professional Designations (or
`any successor thereto);
`(B) on the appropriate use of designations
`in the sale of insurance products that, to the
`extent practicable, conform to the minimum
`requirements of the National Association of
`Insurance Commissioners Model Regulation
`on the Use of Senior-Specific Certifications
`and Professional Designations in the Sale of
`Life Insurance and Annuities (or any succes(cid:173)
`sor thereto); and
`(C) with respect to fiduciary or suitability
`requirements in the sale of annuities that
`meet or exceed the minimum requirements
`established by the Suitability in Annuity
`Transactions Model Regulation of the Na(cid:173)
`tional Association of Insurance Commis(cid:173)
`sioners (or any successor thereto); and
`(2) $100,000 for each of 3 consecutive fiscal
`years, if the recipient is a State, or an eligible
`entity of a State, that has adopted-
`(A) rules on the appropriate use of designa(cid:173)
`tions in the offer or sale of securities or in(cid:173)
`vestment advice that meet or exceed the
`minimum requirements of the NASAA Model
`Rule on the Use of Senior-Specific Certifi(cid:173)
`cations and Professional Designations (or
`any successor thereto); or
`(B) rules-
`(i) on the appropriate use of designations
`in the sale of insurance products that, to
`the extent practicable, conform to the
`minimum requirements of the National
`Association of Insurance Commissioners
`Model Regulation on the Use of Senior(cid:173)
`Specific Certifications and Professional
`Designations in the Sale of Life Insurance
`and Annuities (or any successor thereto);
`and
`(ii) with respect to fiduciary or suit(cid:173)
`ability requirements in the sale of annu(cid:173)
`ities that meet or exceed the minimum re(cid:173)
`quirements established by the Suitability
`in Annuity Transactions Model Regulation
`of the National Association of Insurance
`Commissioners (or any successor thereto).
`(f) Subgrants
`A State or eligible entity that receives a grant
`under this section may make a subgrant, as the
`State or eligible entity determines is necessary
`to carry out the activities funded using a grant
`under this section.
`(g) Reapplication
`A State or eligible entity that receives a grant
`under this section may reapply for a grant under
`this section, notwithstanding the limitations on
`grant amounts under subsection (e).
`(h) Authorization of appropriations
`There are authorized to be appropriated to
`carry out this section, $8,000,000 for each of fis(cid:173)
`cal years 2011 through 2015.
`(Pub. L. 111-203, title IX, §989A, July 21, 2010, 124
`Stat. 1941.)
`
`CODIFICATION
`Section was not enacted as part of subtitle C of title
`X of Pub. L. 111-203, which comprises this part.
`
`EFFECTIVE DATE
`Section effective 1 day after July 21, 2010, except as
`otherwise provided, see section 4 of Pub. L. 111-203, set
`out as a note under section 5301 of this title.
`
`§ 5538. Mortgages loans; rulemaking procedures;
`enforcement
`(a)(1) Within 90 days after March 11, 2009, the
`Federal Trade Commission shall initiate a rule(cid:173)
`making proceeding with respect to mortgage
`loans in accordance with section 553 of title 5.
`Such rulemaking shall relate to unfair or decep(cid:173)
`tive acts or practices regarding mortgage loans,
`which may include unfair or deceptive acts or
`practices involving loan modification and fore(cid:173)
`closure rescue services. Any violation of a rule
`prescribed under this subsection shall be treated
`as a violation of a rule under section 18 of the
`Federal Trade Commission Act (15 U.S.C. 57a)
`regarding unfair or deceptive acts or practices.
`(2) Paragraph (1) shall not be construed to au(cid:173)
`thorize the Federal Trade Commission to pro(cid:173)
`mulgate a rule with respect to an entity that is
`not subject to enforcement of the Federal Trade
`Commission Act (15 U.S.C. 41 et seq.) by the
`Commission.
`(3) Before issuing a final rule pursuant to the
`proceeding initiated under paragraph (1), the
`Federal Trade Commission shall consult with
`the Federal Reserve Board concerning any por(cid:173)
`tion of the proposed rule applicable to acts or
`practices to which the provisions of the Truth in
`Lending Act (15 U.S.C. 1601 et seq.) may apply.
`(4) The Federal Trade Commission shall en(cid:173)
`force the rules issued under paragraph (1) in the
`same manner, by the same means, and with the
`same jurisdiction, powers, and duties as though
`all applicable terms and provisions of the Fed(cid:173)
`eral Trade Commission Act (15 U.S.C. 41 et seq.)
`were incorporated into and made part of this
`section.
`(b)(1) Except as provided in paragraph (6), in
`any case in which the attorney general of a
`State has reason to believe that an interest of
`the residents of that State has been or is threat(cid:173)
`ened or adversely affected by the engagement of
`any person subject to a rule prescribed under
`subsection (a) in a practice that violates such
`rule, the State, as parens patriae, may bring a
`civil action on behalf of the residents of the
`State in an appropriate district court of the
`United States or other court of competent juris(cid:173)
`diction-
`(A) to enjoin that practice;
`(B) to enforce compliance with the rule;
`(C) to obtain damages, restitution, or other
`compensation on behalf of residents of the
`State; or
`(D) to obtain penalties and relief provided by
`the Federal Trade Commission Act [15 U.S.C.
`41 et seq.] and such other relief as the court
`considers appropriate.
`(2) The State shall serve written notice to the
`primary Federal regulator of any civil action
`under paragraph (1) at least 60 days prior to ini(cid:173)
`tiating such civil action. The notice shall in-