Opinion

A Compliance Case Study

I received a call from the owner of a settlement services company seeking representation because a number of clients had stopped utilizing his services. Apparently this company had recently been targeted by a class action lawsuit alleging illegal kickbacks.

Although the case settled in its initial stages, the complaint filed in federal court was extremely detailed and there were means of verifying at least a portion of the claims.

Despite the fact the lawsuit was over, lenders were treating the company as persona non grata.  He was being told that because of the risk of horizontal regulatory audits and/or requirements of third party due diligence, they were going to look to other relationships at least for the time being.

Obviously there was little I could do to help because I could not force anyone to continue the prior referral relationships. The reason I share this story with all if you is so that people understand that the cost of non-compliance can far outweigh the fines or settlements that it can lead to. Indeed, through the combination of third party due diligence and horizontal audits the regulators have established a mindset where the business community will ultimately become a significant part of the compliance enforcement process.

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Originations Law and regulation
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