News & Publications

State Bank Closure

Publication Date: Feb 14, 2020

NDBF Closes Ericson State Bank, Ericson, Nebraska

Contacts:

Mark Quandahl, Director                                       Patricia Humlicek Herstein, General Counsel

402-417-8982                                                          402-525-8312                                                                                                

mark.quandahl@nebraska.gov                               patricia.herstein@nebraska.gov

    

Main Office:  402-471-2171                                         

 

FOR IMMEDIATE RELEASE

February 14, 2020 (Lincoln, Neb.) – The Nebraska Department of Banking and Finance (NDBF) announced that at 4:00 p.m. today it closed Ericson State Bank, Ericson, Nebraska, because it was insolvent.  NDBF had been closely monitoring the bank for some time and recently made a demand for a capital injection, which was not met.

 

NDBF named the Federal Deposit Insurance Corporation (FDIC) as receiver of the bank.  The FDIC has entered into a purchase and assumption agreement with Farmers and Merchants Bank, Milford, Nebraska.  The transaction includes the assumption of all customer deposits.  The sole office of Ericson State Bank, located at 427 Central Avenue, Ericson, Nebraska, will be open for business on Tuesday, February 18, 2020, under the name, Farmers and Merchants Bank.  Farmers and Merchants Bank is owned by Country Bank Shares, Inc., Milford, Nebraska.

 

“The failure of Ericson State Bank resulted primarily from large out-of-territory commercial loan losses and poor management practices which led to a deterioration of the bank’s capital.  When the capital was not replenished, the Department was left with no option but to place the insolvent institution in receivership,” said Mark Quandahl, NDBF Director.  Quandahl noted that the overwhelming majority of Nebraska banks are in a strong condition.

 

Ericson State Bank was chartered in 1959, and is a subsidiary of Wheeler County Bancshares, Inc., a one-bank holding company, located in Ericson, Nebraska, owned by Debra Poulsen and Jack Poulsen.  As of December 31, 2019, Ericson State Bank had total assets of approximately $100.9 Million and total deposits of approximately $95.2 Million. 

A copy of a 2019 NDBF regulatory action against the bank can be found at http://www.nebraska.gov/ndbf/searches/Orders/20190923_EricsonStateBank_ConsentOrder.pdf

 

The most recent closures of Nebraska state-chartered banks occurred November 4, 2011, when Mid City Bank, Inc., Omaha, Nebraska, was declared insolvent, and February 13, 2009, when NDBF closed Sherman County Bank, Loup City, Nebraska.  Mid City Bank, Inc. was purchased by Premier Bank, formerly known as Purdum State Bank, Purdum, Nebraska.  Sherman County Bank was purchased by Heritage Bank, headquartered in Wood River, Nebraska.  Prior to the Loup City closing, no state-chartered bank had been closed since 1989.

 

Customers with questions about today's transaction should call the FDIC toll-free at

1-877-367-2717.

Interested parties may also visit the FDIC website:      

https://www.fdic.gov/bank/individual/failed/banklist.html

Statistical data about the bank may be found at: https://www7.fdic.gov/idasp/confirmation_outside.asp?inCert1=18265

 

 

********************************************************************************

  • Mark Quandahl and Patti Herstein will be available between 4:00 p.m. – 6:00 p.m. CST on Friday, February 14.

  • Mark Quandahl will be available on Saturday, February 15, 9:00 a.m. – 4:00 p.m. CST.

  • The NDBF main office will be closed for the weekend and the Presidents’ Day Holiday on Monday, February 17, and will reopen Tuesday, February 18, from 8:00 a.m. – 5:00 p.m. CST

********************************************************************************

A copy of the official release is here:

NDBF Press Release Insolvent Bank Closure 2-14-2020

Single Bank Pooled Method RFP 2020-001 Questions and Responses

Publication Date: Jan 24, 2020

Nebraska Department of Banking and Finance

January 24, 2020

Responses to Questions regarding RFP 2020-001

The Nebraska Department of Banking and Finance has issued a Request for Proposal for an Administrator of the Public Funds Security Act Single Bank Pooled Method described in Nebraska Revised Statutes Sections 77-2386 et seq.

The last day to submit questions regarding the RFP was 1/17/2020.  Below are the Department’s responses to all questions submitted by the deadline.

 

RFP can be found at this link:  https://ndbf.nebraska.gov/sites/ndbf.nebraska.gov/files/news-release/Banking%20and%20Finance%20RFP2020-001.pdf

 

 

“RFP Number 2020-001-Public Funds Security Act Single Bank Pooled Method Questions

 

 

Solicitation Section

Reference

Solicitation

Page Number

Question

#1.

Scope of Service

Cover Page

Does the Department anticipate appointing more than one Administrator?

 

Response to #1

 

No. However, in the event of the need for a successor Administrator to be appointed, it may be possible that more than one Administrator could be named over the life of the appointment.

 

#2.

Glossary of Terms and Section V., B. 12

 

Page viii and

page 20

 

Should the definition of “public depositor” reflect a reference to “agency” or “state agency” rather than “state entity” as proposed?

 

Response to #2

 

No. The reference to “public depositors” is to political subdivisions of the State of Nebraska, such as School districts, townships.

 

#3.

Section I., Q.

Page 6

Does NDBF anticipate conducting oral

Interviews / presentations?

 

Response to #3

 

Yes.  NDBF will conduct oral interview / presentations if necessary to assist in the Administrator selection.

 

#4.

Section I., Q.

Page 6

If an applicant knows it will not be available for oral

interview/presentations during the time frame identified in the RFP, can alternate arrangements be made for this purpose?

 

Response to #4

 

Yes.

 

#5

Section I., R.

Page 6

Does NDBF anticipate asking for additional Best and Final Offers? If so, in light of the July 1, 2020, effective date of the law, is this potential factored into the timeline?

 

Response to #5

 

Yes. If necessary, NDBF will request BAFOs.  Potential for BAFOs has been factored into the proposed timeline; however, NDBF reserves the right to adjust the timeline.

 

#6

Section II., B.

. Page 8

If notifications are intended to apply for issues beyond the appointment of the Administrator, should notification by electronic means be authorized?

 

Response to #6

 

Yes.

 

#7

Section II., M.

Page 10

Since the Administrator is granted the same statutory immunity as the Director/Department of Banking, is a cashier's check or performance bond necessary?

 

Response to #7

 

A legal conclusion as to the extent of immunity extended to the Administrator has yet to be determined. The Department is requiring a cashier’s check or performance bond of the Administrator. The Director will not consider any applicant administrator unwilling or unable to post such security.

 

#8

Section II., M,

Page 10

Does the Department intend to require the performance bond or cashier’s check to be provided by the designated Administrator?

 

Response to #8

 

Yes.  The Performance bond or cashier’s check must be provided by the designated Administrator upon appointment.

 

#9

Section II., M.

Page 10

If a cashier’s check or performance bond in the amount of $100,000 is required to be provided by the designated Administrator, has the cost of the performance bond been factored into the fees that may be charged by the Administrator?

 

Response to #9

 

No. A performance bond for services to be provided to or on behalf of the State of Nebraska is not extraordinary.

 

#10

Section II.,M.

Page 10

Can applicant satisfy the contract surety requirements through use of a bank-issued or FHLB-issued letter of credit?

 

Response to #10

 

Yes, provided the letter of credit can be drawn upon demand by NDBF.

 

#11

Section II., Q.

Page 11

Should the RFP contain provisions addressing the circumstances under which the applicant may terminate its obligation to administer the program?

 

Response to #11

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth all circumstances under which the applicant would terminate its obligation to administer the program, or forfeit its appointment.

 

#12

Section III., B.

Page 13

Parent corporation of applicant currently provides payroll services for applicant. May the parent corporation satisfy the requirement to “use a federal immigration verification system to determine the work eligibility status of employees physically performing services within the appointment period?” 

 

Response to #12

 

Yes.

 

#13

Section III., E.

Page 14

Would NDBF consider allowing an exception to the restriction on fee increases during the first two years of the appointment or any renewal thereof based on “unanticipated circumstances?”

 

Response to #13

 

Unknown.  NDBF will not speculate on future actions based on unknown circumstances.  Any fee increases would be subject to the prior approval of the Director.

 

#14

Section III., F.

Page 14

How does NDBF anticipate determining “deviation from “industry standards?”

 

Response to #14

 

By comparison to standard practices of other administrators and entities involved with monitoring, reporting or supervising the pledging of securities to secure public deposits.

 

#15

Section III., H.

Page 14

Can the RFP be clarified to confirm that applicant shall retain ownership and title of any software or processes developed to automate the program reporting process and the right to patent, license, or copyright, duplicate, transfer, sell, the design, specifications, concept, or deliverable of such software or processes? 

 

Response to #15

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth all ownership and title concerns pertaining to its administration of the program.

 

 

#16

Section III., I. 1.

Page 15

Can NDBF clarify who are “contractors’ employees?”

 

Response to #16

 

Any person employed by the Administrator or Sub-Administrator or who provides services in furtherance of the appointment.

 

#17

Section III., I.

Page 16

Some of the required coverage limits exceed industry standards and are in excess of the limits currently in place under applicant’s insurance coverages and will result in significant cost increases for applicant. Will NDBF consider lower coverage limits for certain categories of required insurance coverage?

 

Response to #17

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed lower insurance coverage limits pertaining to its administration of the program.

 

#18

Section III., I.

Page 16

One of the required insurance coverages is “Independent Administrators” coverage. It does not appear that this term is utilized within the insurance industry as an acknowledged type of coverage. Would NDBF clarify the specific type of coverage that will satisfy this requirement? 

 

Response to #18

 

Independent Contractor.

 

#19

Section III., O.

Page 18

Can NDBF provide a timeframe within which the

Administrator must comply with changed Nebraska

Technology Access Standards in the event of an amendment to the appointment?

 

 

Response to #19

 

NDBF will consider commercially reasonable time frames for technology compliance in the event of an amendment to the Nebraska Technology Access Standards.  Due to the potential of cyber security issues, a standard predetermined time is not practical and the Administrator will need to present compliance concerns to the Director on a case by case basis.

 

#20

Section III., R.

Page 18

Can NDBF clarify who or what constitutes the “Customer” of the administrator for purposes of the “Warranty” provisions?

 

 

Response to #20

 

Customer includes all parties reliant upon the services of the Administrator. 

 

#21

Section IV., C.

Page 19

With respect to activities of the State, State Auditor, or Department, will any audit conducted be limited to a review of applicant activity related duties as Administrator of the pooled collateral program or will other applicant-related activities and financial information be subject to audit?

 

Response to #21

 

The Department is not in a position to limit, restrict or otherwise comment on any audit conducted by the Auditor of Public Accounts.

 

#22

Section V., F. (3) and

Exhibit E – Transactions

 

Page 21 and 30

Can NDBF explain why provisions requiring the Administrator to pre-approve the acceptance, substitution or withdrawal of any Pledged Securities are included in the RFP? There does

not appear to be any statutory authority for requiring prior approval by the Administrator. Section 77–2392 expressly provides that a bank, …shall have the right at any time and without prior approval to substitute or exchange other securities of equal value” subject to the requirement that the

substituted or exchanged securities do not reduce the market value of the securities to less than 102% of the public funds required to be collateralized.

 

 

Response to #22

 

The agreement between the Administrator and bank should provide for advance notice to the Administrator of any security substitutions. The provisions should enable communications preventing pledging gaps or mismatches which may result in non-compliance fees while maintaining required collateralization of public funds.  NDBF will consider responses which provide for prior or contemporaneous notice of substitution in lieu of prior approval. The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator. 

 

#23

Section V., G.

Page 22

Will the Administrator, in “providing” reports to custodial officials within 20 days after receiving monthly reports from Covered Depositories, be able to satisfy the requirement by posting the required information on the Administrator’s

website?

 

Response to #23

 

If the governmental unit has agreed in advance to receive such reports by accessing the administrator’s website, provision of reports may be accomplished by electronic means.

 

#24

Section V., G.

Page 22

Should the reports referenced in Section V. G. (1)-(7) be made available only to program participants, rather than being made available to the public?

 

Response to #24

 

The Department considers the reports referenced to be public records that should be made available to the public.

 

#25

Section V., G.

Page 22

As of what date is the information in the reports referenced in Section V. G. (1)-(7) to be obtained? 

 

Response to #25

 

The most recent available monthly report, as of the time of the request.

 

#26

Section V., H.

Page 22

Is the Administrator to retain any “non-compliance fees” received?

 

Response to #26

 

Yes. So long as the fee reflects non-compliance with the guidance.  The Department retains the authority to assess fines and penalties in accordance with the Banking Act. 

 

#27

Section V., H. and

Exhibit E –  Noncompliance and

Remedies

Page 22 and 31

Section V. H. authorizes recovery of non-compliance fee from Custodial Officials. The applicable list of program fees under Exhibit E only addresses non-compliance fees for Covered Depositories and Qualified Trustees and does not

make any reference to Custodial Officials under the

provisions regarding non-compliance and remedies. Should the RFP be revised to reflect the circumstances under which Custodial Officials may be subject to non-compliance fees?

 

Response to #27

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed circumstances under which Custodial Officials may be subject to non-compliance fees.  

 

#28

Exhibit E – Month-end

Bank Report of

Deposits and Monthend

Qualified Trustee

Report

 

Page 29 and 30

The bank reporting requirement relating to “deposits” and the Qualified Trustee reporting requirement, contain categories of information relating to collateral at items r) and s), relating

to face or par value and market value of securities pledged. Should these categories of information be deleted? If not, there would appear to be no statutory basis to require this information to be provided on a daily basis

 

Response to #28

 

The listed reporting requirements are considered to be essential for the Department to evaluate the Administrator’s performance. The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed format and information to be contained on the report, the timeliness of said report and the justification for the same.

 

#29

Exhibit E – Month-end

Bank Report of

Deposits

 

Page 29

Does a requirement for covered depositories to report daily balances of deposits only apply if a deposit guarantee bond is utilized for pledging purposes? (See Section 77-2394)

 

 

Response to #29

 

No. Administrator is to enable a process to confirm collateralization coverage, appropriately protecting public deposits. 

 

#30

Exhibit E – Program

Fees

 

Page 30

Will NDBF consider allowing a higher maximum application fee if application fees are tiered based on bank asset sizes?

 

Response to #30

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed higher maximum application fees based on bank asset size and the justification for the same.

 

#31

Exhibit E – Program

Fees

 

Page 30

Will NDBF consider allowing an annual administration fee?

 

Response to #31

 

The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed annual administration fee and the justification for the same.

 

#32

Section VI., B. 2.

Page 33

This section requires specifically named individuals who will be working on NDBF’s project to be identified and for resumes to be provided to NDBF for review. At this time, applicant is unsure as to whether it will appoint a current employee or employees to fill this administrative role or if it

will hire new personnel for this purpose. May applicant simply designate individuals in leadership/supervisory roles who will

ultimately be responsible for supervisions and for whom responsible individuals will ultimately report, to satisfy this requirement?

 

Response to #32

 

Yes.

 

#33

General

N/A

If pending legislation (LB 854) is adopted, will the program requirements and forms be revised to reflect any such statutory changes?

 

Response to #33

 

Yes.

 

#34

General

N/A

Will NDBF allow proposed forms and agreements (Exhibits B, C, D, and E) to be modified, based on anticipated input from participants (Covered Depositories, Custodial Officials and Qualified Trustees)?

 

Response to #34

 

Yes. The RFP and the response of the applicant Administrator must contain all operating understandings between NDBF and Administrator.  The applicant Administrator should set forth any proposed forms and agreements and the justification for the same.

 

 

Single Bank Pooled Method Administrator RFP

Publication Date: Jan 10, 2020

Nebraska Department of Banking and Finance

January 10, 2020

Notice of Request for Proposal

The Nebraska Department of Banking and Finance has issued a Request for Proposal for an Administrator of the Public Funds Security Act Single Bank Pooled Method described in Nebraska Revised Statutes Sections 77-2386 et seq.

The due date and time for responses to the RFP is 2:00 p.m. Central Standard Time on February 14, 2020. 

All information pertinent to this request can be found on the Department’s webpage at https://ndbf.nebraska.gov/

Questions regarding the RFP should be submitted to Nebraska Department of Banking and Finance Director Mark Quandahl at mark.quandahl@nebraska.gov.

Single Bank Pooled Method Administrator RFP

 

NDBF ANNOUNCES TOP INVESTOR THREATS FOR 2020

Publication Date: Dec 17, 2019

 

December 17, 2019 (LINCOLN, NEB.) — The Nebraska Department of Banking and Finance (NDBF) today announced the top five investment products or schemes likely to trap Nebraska’s investors in the New Year and recommended steps they can take to protect themselves from investment fraud.

The list was developed by surveying members of the North American Securities Administrators Association, of which NDBF is a member, to identify threats investors are likely to see in 2020. The following were most frequently identified by NASAA members as the top five areas of concern for the coming year:

• Promissory Notes

• Ponzi Schemes

• Real Estate-related Investments

• Cryptocurrency-related Investment Products

• Social Media/Internet-based Investment Schemes

"It is important for investors to understand what they are investing in and who they are investing with. Don’t fall for promises of guaranteed high returns with little to no risk or deals pitched with a false sense of urgency or limited availability," said Deputy Director Claire McHenry. "Before you ring in the New Year, make a resolution to protect your money from fraudulent investments and those who may be trying to fleece you."

Investment offers that sound "too good to be true" often share similar characteristics. The most common telltale sign of an investment scam is an offer of guaranteed high returns with no risk. All investments carry the risk that some, or all, of the invested funds could be lost. "Anyone who says their investment offer has no risk is lying," Deputy Director McHenry said. "No one can guarantee an investment return. Remember if it sounds too good to be true, it usually is."

Many of the threats facing investors involve private offerings, which are exempt from federal securities registration requirements and are not sold through public stock exchanges. "Unregistered private offerings generally are high-risk investments and don’t have the same investor protection requirements as investments sold through public markets," Deputy Director McHenry said.

Investors should always ask if the salesperson and the investment itself are properly licensed or registered. This information can be confirmed by the NDBF. Working with a properly licensed investment professional affords investors certain legal protections. "For the same reasons you wouldn’t go to an unlicensed doctor or dentist, you should avoid unregistered investment salespeople and their products," Deputy Director McHenry said.

Information about each of the 2020 investor threats and contact information for all state and provincial securities regulators can be found on NASAA’s website at www.nasaa.org. NDBF also offers a wide range of free investor education materials and can help investors research the background of those selling or advising the purchase of an investment. NDBF can be reached at (402) 471-3445 or through its website at https://ndbf.nebraska.gov/.

#####

Consumer Advisory - Top Investor Threats.pdf

BlueExpress Electronic Securities Filing Outage and Update

Publication Date: Dec 2, 2019

December 2, 2019 (LINCOLN, NEB.)  — The Nebraska Department of Banking and Finance (NDBF) announced today that ClearSky is conducting updates to its BlueExpress filing solution.  Filers using BlueExpress to file Form NF for mutual fund filings should be aware of scheduled disruptions to electronic filings and a change required in order to continue electronic filing. 

 

Filers should expect an electronic filing outage on Thursday, January 9, 2020 in order for ClearSky to complete and verify the migration and confirm state access to the new filing database.  Filers will also need to update the BlueExpress State URL. NDBF notified electronic filers of the required update. If you did not receive the notification or otherwise need assistance, please contact NDBF at DOB.SecuritiesFiling@nebraska.gov or 402-471-3445.

 

ClearSky provided NDBF with the following schedule:

 

Date:  

January 8, 2020          Final day to use current BlueExpress State URL

January 9, 2020          Electronic filing outage for all filers

January 10, 2020        Electronic filing to resume using new BlueExpress State URL

###

Industry Advisory - BlueExpress Outage and Update.pdf

SECURITIES LICENSE RENEWAL DEADLINE

Publication Date: Oct 31, 2019

 

NDBF REMINDS INVESTMENT ADVISERS, BROKER-DEALERS OF DECEMBER 31, 2019 RENEWAL DEADLINE

November 1, 2019 (LINCOLN, NEB.) The Nebraska Department of Banking and Finance ("NDBF") reminds state-registered investment advisers, broker-dealers, and their agents and representatives that registrations in Nebraska expire on December 31, 2019. Firms will need to assemble required documentation and review filings to make sure information is accurate and up-to-date. Failure to submit filings or provide required information by the appropriate deadline will result in the termination of the registration on January 1, 2020.

State-registered investment adviser and investment adviser representative deadlines:

By December 20, 2018 – Submit Nebraska specific forms and documentation to NDBF

Before December 26, 2018 – Submit renewal payments through CRD/IARD

Before December 26, 2018 – Submit required electronic form filings through CRD/IARD

FINRA broker-dealer and agent deadlines:

Before December 26, 2018 – Submit renewal payments through CRD/IARD

Before December 26, 2018 – Submit required electronic form filings through CRD/IARD

Non-FINRA Broker-Dealers and agents must submit all required forms and documentation to NDBF by December 20, 2019

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2020 Non FINRA Renewal Notice and Checklist.pdf

2020 IA Renewal Notice.pdf

Industry Advisory

Publication Date: Oct 28, 2019

 

Department of Banking and Finance

Industry Advisory

NDBF OFFERS RESOURCES TO HELP INVESTMENT PROFESSIONALS WORK WITH CLIENTS AFFECTED BY THE OPIOID EPIDEMIC

October 28, 2019 (LINCOLN, NEB.) — The Nebraska Department of Banking and Finance (NDBF) today announced the availability of resources to raise awareness of the impact of the opioid epidemic on investment professionals and their clients, especially senior investors.

"The opioid crisis in North America is devastating families and our communities. It is also a rising contributor to elder financial abuse," said NDBF Deputy Director Claire McHenry.

The U.S. Department of Health and Human Services in 2017 declared opioid abuse a public health emergency and estimated in 2017 that 11.4 million Americans misused prescription opioids. Recent research by Virginia Tech’s Center for Gerontology and the Elder Justice Coalition identified a connection between opioid abuse and elder abuse, including financial exploitation.

Deputy Director McHenry said the agency is offering two new resources to help raise awareness of how the opioid crisis impacts investment professionals and their clients.

The first is a guide to help investment professionals understand the many ways opioid use disorder might affect their clients, how to spot signs of financial exploitation, and how to help clients affected by opioid abuse. The guide also includes a list of helpful resources. The second resource consists of conversation starters financial professionals can use to help start a dialogue with clients about the financial ramifications of opioid addiction.

"Investment adviser representatives and broker-dealer agents are well positioned to be part of the solution, but they have to be prepared to talk to clients in crisis," Deputy Director McHenry said. "The cost of opioid addiction and treatment can have major financial ramifications. Clients facing opioid addiction – either themselves or within the family – may be strapped for resources and can be vulnerable to poor financial decision-making or even fraud."

The resources are also available on the agency’s website ndbf.nebraska.gov.

More information about the laws governing the securities industry in Nebraska can be found on NDBF’s website at ndbf.nebraska.gov. If you have questions about any investment matter, call NDBF’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

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Industry Advisory - Opioid Guide.pdf

Industry Advisory - Opioid Addiction.pdf

Pooled Collateral RFI

Publication Date: Sep 27, 2019

Nebraska Department of Banking and Finance

September 27, 2019

Notice of Request for Information

The Nebraska Department of Banking and Finance has issued a Request for Information for gathering information from qualified parties interested in serving as administrator of a Single Bank Pooled Collateral program as set forth in LB 622 of the 2019 Nebraska Legislature.

The due date and time for responses to the RFI is 2:00 p.m. Central Daylight Time on November 1, 2019.

All information pertinent to this request can be found on the Department’s webpage at https://ndbf.nebraska.gov/

Questions regarding the RFI should be submitted to Nebraska Department of Banking and Finance Director Mark Quandahl at mark.quandahl@nebraska.gov

RFI Pooled Collateral 2019 FINAL September 19 2019

 

Consumer Advisory Opportunity Zone Investments

Publication Date: Aug 6, 2019

NDBF ISSUES ADVISORY ON OPPORTUNITY ZONE INVESTMENTS

 

August 6, 2019 (LINCOLN, NEB.)  — The Nebraska Department of Banking and Finance (NDBF) today issued an advisory to raise awareness of the risks associated with investments in opportunity zones, economically distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment as part of the 2017 Tax Cuts and Jobs Act.

 

“This program provides an opportunity to strengthen investments in low-income communities and rural areas that traditionally struggled to attract the capital necessary to spur economic growth and job creation,” Deputy Director Claire McHenry said.

 

Investors attracted to opportunity zone investments for the potential tax benefits and promise of return on investment should weigh various factors before deciding to invest. The advisory discusses how opportunity zone investments work, the risks investors should understand when considering opportunity zone investments, and steps investors can take to protect themselves.

 

The full advisory is available on the agency’s website ndbf.nebraska.gov.

 

Separately, the North American Securities Administrators Association (NASAA), of which NDBF is a member, and the U.S. Securities and Exchange Commission (SEC) recently issued a summary that explains the application of the federal and state securities laws to opportunity zone investments.

 

The summary also provides an overview of the SEC and state requirements relating to qualified opportunity funds and their securities offerings, broker-dealer registration, and considerations for advisers to a qualified opportunity fund. The summary is available on the NASAA website http://www.nasaa.org/wp-content/uploads/2019/07/Opportunity-Zones-NASAA-SEC-Staff-Statement.pdf

 

Before making any financial decisions, ask questions, do your homework and contact NDBF at (402) 471-3445 for more information.

 

More information about the laws governing the securities industry in Nebraska can be found on NDBF’s website at ndbf.nebraska.gov. If you have questions about any investment matter, call NDBF’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

Consumer Advisory - Opportunity ZOne.pdf

Informed Investor Advisory - Opportunity Zone.pdf

 

###

NOTICE OF RULEMAKING HEARING

Publication Date: Jul 11, 2019

 

NEBRASKA DEPARTMENT OF BANKING AND FINANCE

Notice is hereby given that the Nebraska Department of Banking and Finance will hold a rulemaking hearing on August 19, 2019, commencing at 1:30 p.m., at the offices of the Department of Banking and Finance, 1526 K Street, Suite 300, Lincoln, Nebraska 68508.

The purpose of the hearing is to take testimony and evidence concerning the following changes to the Rules and Regulations of the Department:

1) The proposed revision of 48 NAC Chapters 2, 4, 5, 7, 10, 12, 18, 20, and 21.

2) The proposed outright repeal of 48 NAC Chapters 17, 22-34, and 36.

48 NAC 2—Definitions. The purpose of the proposed amendments is to repeal definitions that are no longer necessary due to the proposed amendments to 48 NAC 21, and the proposed outright repeal of 48 NAC 22-34, and 36. The proposal also clarifies existing definitions and adopts a definition of the term "Department."

48 NAC 4—Broker-Dealers. The purpose of the proposed amendments is to eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 5—Issuer-Dealers. The purpose of the proposed amendments is to eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 7—Investment Advisers. The purpose of the proposed amendments is to adopt cybersecurity requirements for investment advisers. In addition, the proposed amendments eliminate requirements for manual signatures and the payment of filing fees by physical checks or money orders.

48 NAC 10—Recordkeeping by Investment Advisers. The purpose of the proposed amendments is to amend recordkeeping requirements for investment advisers as related to cybersecurity.

48 NAC 12—Fraudulent, Dishonest and Unethical Business Practices. The purpose of the proposed amendments is to provide that an investment adviser’s use of a client’s password to access the client’s account is a dishonest and unethical business practice. The rule further provides that an investment adviser’s failure to establish, maintain and enforce a required policy is a dishonest and unethical business practice.

48 NAC 17—Uniform Limited Offering Exemption. This chapter is proposed for outright repeal as such rule is no longer necessary as a result of the United States Securities and Exchange Commission’s repeal of Regulation D, Rule 505, 17 CFR 230.505.

48 NAC 18—Information Requirements for the Section 8-1111(20) Nebraska Intrastate Issuer Exemption. The purpose of the proposed amendments is to eliminate

requirements for manual signatures and the payment of filing fees by physical checks or money order.

48 NAC 20—Federal Covered Securities. The purpose of the proposed amendments is to eliminate the requirement that issuers offering securities in Nebraska pursuant to the Securities & Exchange Commission ("SEC") Regulation A, Tier 2 use a broker-dealer, provided no commissions or other remuneration are paid as provided by LB 259 (2019). The proposal also eliminates requirements that filing fees be paid by physical check or money order.

48 NAC 21—Underwriting Expenses, Underwriter’s Warrants, Selling Expenses, and Selling Securities Holders. The purpose of the proposed amendment is to replace this rule with a rule captioned "North American Securities Administrator Association Statements of Policy." The rule incorporates by reference Statements of Policy adopted by the North American Securities Administrators Association ("NASAA") and requires issuers registering offerings to comply with the requirements of the Statements of Policy. The following NASAA Statements of Policy are proposed for adoption:

1) "Statement of Policy Regarding Corporate Securities Definitions" as amended on May 6, 2018.

2) "Statement of Policy Regarding Underwriting and Selling Expenses, Underwriter’s Warrants and Selling Expenses" as amended on May 6, 2018.

3) "Statement of Policy Regarding Promotional Shares" as amended on March 31, 2008.

4) "Statement of Policy Regarding Promoters’ Equity Investment" as amended on September 11, 2016.

5) "Statement of Policy Regarding Loans and Other Material Transactions" as amended on May 6, 2018.

6) "Statement of Policy Regarding the Impoundment of Proceeds" as amended on March 31, 2008.

7) "Statement of Policy Regarding Unequal Voting Rights" as amended on September 11, 2016.

8) "Statement of Policy Regarding Specificity in Use of Proceeds" as amended on September 11, 2016.

9) "Statement of Policy Regarding Unsound Financial Condition" as amended on May 6, 2018.

10) "Statement of Policy Regarding Debt Securities" as adopted on April 25, 1993.

11) "Statement of Policy Regarding Preferred Stock" as amended on September 11, 2016.

12) "Statement of Policy Regarding Options and Warrants" as amended on March 31, 2008.

13) "Statement of Policy Regarding Real Estate Investment Trusts" as amended on May 7, 2007.

14) "Statement of Policy Regarding Real Estate Programs" as amended on May 7, 2007.

15) "Registration of Oil and Gas Programs" as amended on May 6, 2012.

16) "Registration of Publicly-Offered Cattle Feeding Programs" as adopted on September 17, 1980.

17) "Registration of Commodity Pool Programs" as amended on May 6, 2012.

18) "Equipment Programs" as amended on May 6, 2012.

19) "Registration of Asset Backed Securities" as amended on May 6, 2012.

20) "Statement of Policy Regarding Church Extension Fund Securities" as amended on April 18, 2004.

21) "Mortgage Program Guidelines" as amended on May 7, 2007.

22) "Omnibus Guidelines" as amended on May 7, 2007.

23) "Statement of Policy Regarding Use of Electronic Offering Documents and Electronic Signatures" as adopted on May 7, 2017.

48 NAC 22—Promotional Shares. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 23—Promoter’s Equity Investment. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 24—Loans and Other Material Affiliated Transactions. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 25—Impoundment of Proceeds. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 26—Unequal Voting Rights. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 27—Specificity Regarding Use of Proceeds. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 28—Unsound Financial Condition. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 29—Debt Securities. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 30—Preferred Stock. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 31—Options and Warrants. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 32—Real Estate Investment Trusts. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 33—Limited Partnerships. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 34—Registration of Asset Backed Securities. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

48 NAC 36—General Obligation Financing by Religious Denominations. This chapter is proposed for outright repeal due to the adoption of the NASAA Statements of Policy in the proposed amendments to 48 NAC 21.

The rulemaking hearing is being conducted under and by virtue of the provisions of Section 84-907, R.R.S 1943, as amended, which provides that COPIES OF THE PROPOSED RULES ARE AVAILABLE FOR PUBLIC EXAMINATION at the Office of the Department of Banking and Finance, 1526 K Street, Suite 300, Lincoln, Nebraska 68508, and at the Office of the Secretary of State, 1201 N Street, Suite 120, Lincoln, Nebraska 68509. In addition, the proposed rules are available on the Department of Banking and Finance’s website at https://ndbf.nebraska.gov, and the Secretary of State’s website www.sos.ne.gov.

A copy of the Fiscal Impact Statement is available at the Office of the Department of Banking and Finance and on the Department’s website.

All interested persons are invited to attend and testify at the hearing. Interested persons may also submit written comments to the Department of Banking and Finance prior to the hearing, which comments will be made part of the hearing record at the time of the hearing.

If auxiliary aids or reasonable accommodations are needed for attendance at this hearing, please call the Nebraska Department of Banking and Finance at (402) 471-2171, or, for persons with hearing impairments, please call the Nebraska Relay System, (800) 833-7352 TDD. This contact should be made at least seven (7) days prior to the hearing.

Dated at Lincoln, Nebraska, this 11th day of July, 2019.

Claire McHenry, Deputy Director—Securities

Nebraska Department of Banking and Finance

NDBF RECOGNIZES WORLD ELDER ABUSE AWARENESS DAY

Publication Date: Jun 14, 2019

NDBF RECOGNIZES WORLD ELDER ABUSE AWARENESS DAY

WARNS OF DANGER SIGNS FOR SUSPECTED FINANCIAL ABUSE

June 14, 2019 (LINCOLN, NEB.)  — In recognition of World Elder Abuse Awareness Day (WEAAD) on June 15, the Nebraska Department of Banking and Finance (NDBF) reminds financial professionals and the public throughout Nebraska to be on the lookout for elder financial abuse, including potential exploitation by family members or caretakers.

“Senior financial exploitation is a growing problem. Many in our elderly population are vulnerable due to social isolation and distance from family, caregiver, and other support networks,” Deputy Director Claire McHenry said. “Taking the time to understand the warning signs and the steps that can be taken to report financial abuse are key to helping those who cannot help themselves.”

The North American Securities Administrators Association (NASAA), of which NDBF is a member, has developed resources to help call attention to the red flags of fraud and suspected guardian financial abuse. For example, the “Guarding the Guardians” publication provides examples of exploitation and information on how to report suspected abuse.

Examples of suspected guardian abuse include:

  • The guardian takes money from the protected individual’s investment portfolio to buy a flashy car for personal use.

  • The guardian overcharges for a caregiving service, such as billing the estate hourly for wait time to file paperwork in person when it could have been submitted online.

  • The guardian does not take the protected individual to medical appointments or purchase necessary medication.

The publication as well as other resources to help seniors are available on NASAA’s Serve Our Seniors website at serveourseniors.org/about/investors/. Other senior investor protection resources are available on the NDBF’s website at ndbf.nebraska.gov.

Financial and investment professionals also are encouraged to contact the agency to request a Senior$afe presentation on how to spot and report suspected senior financial exploitation.

Deputy Director McHenry asks anyone with suspicions of possible senior financial exploitation to contact the agency at 402-471-2171.

More information about the laws governing the securities industry in Nebraska can be found on NDBF’s website at ndbf.nebraska.gov. If you have questions about any investment matter, call NDBF’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

Consumer Advisory - WEAAD.pdf

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Consumer Advisory: Robo-Advisers

Publication Date: May 20, 2019

May 20, 2019 (LINCOLN, NEB.) — Investors are increasingly turning to robo-advisers to help them manage their portfolios. Easy-to-use smartphone apps and online portals make setting up an account with a robo-adviser convenient and quick, which is contributing to their increasing popularity.

The Nebraska Department of Banking and Finance (NDBF) today issued an investor awareness advisory providing information and resources to help investors better understand robo-advisers. The advisory discusses how robo-advisers work and things to consider when investing with a robo-adviser.The full advisory is available on the agency’s website here https://ndbf.nebraska.gov/about/news-publications.

Robo-advisers are relatively new to the investing landscape. Before making any financial decisions, ask questions, do your homework.

More information about the laws governing the securities industry in Nebraska can be found on NDBF’s website at ndbf.nebraska.gov. If you have questions about any investment matter, call NDBF’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

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Consumer Advisory - Robo-Advisers.pdf

Informed Investor Advisory - Robo-Advisers.pdf

Consumer Advisory

Publication Date: Apr 29, 2019

LPL Financial to pay $499,000 to Nebraska for Securities Violations

 

April 30, 2019 (Lincoln, Nebraska) – The Nebraska Department of Banking and Finance (NDBF) announced today that LPL Financial has paid the State of Nebraska $499,000 as part of a nationwide settlement of claims that it sold unregistered securities.

 

“This settlement sends a strong message that states hold firms accountable and continue to serve a vital role in protecting investors,” Deputy Director Claire McHenry said.

The settlement stems from a multi-state investigation led by Alabama and Massachusetts.  State securities regulators concluded that LPL offered and sold unregistered, non-exempt securities and failed to reasonably supervise the flow of information to ensure full and proper compliance with state securities registration requirements.

The settlement also found that LPL violated state securities laws by failing to maintain books and records, failing to effectively supervise its agents and staff, and that it was negligent in cancelling certain third-party services critical for compliance with state securities requirements.

In total, LPL will pay $26 million in civil penalties among the states. Additionally, LPL will offer to repurchase from investors’ securities held in LPL accounts determined to have been unregistered, non-exempt equity or fixed-income securities sold since October 1, 2006, plus 3% interest.

The settlement amount includes a $60,000 fine, $80,000 in costs to the Department, and $359,000 to be paid to the Department of Banking and Finance Settlement Cash Fund.  The settlement funds will primarily be utilized to further financial literacy programs for K-12 Nebraska students.

A copy of the Consent Order is available on the Department’s website http://www.nebraska.gov/ndbf/searches/Orders/20190410_LPLFinancialLLC_ConsentOrder.pdf 

More information about the laws governing the financial industries in Nebraska can be found on the Department’s website at ndbf.nebraska.gov.  If you have questions about any investment matters, call the Department’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

Consumer Advisory - LPL Settlement.pdf

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NDBF NOW ACCEPTING ONLINE FILING FOR UNIT INVESTMENT TRUSTS

Publication Date: Apr 22, 2019

April 22, 2019 (LINCOLN, NEB.) — The Nebraska Department of Banking and Finance (NDBF) today announced that the North American Securities Administrators Association’s (NASAA) Electronic Filing Depository (EFD) System has been expanded to accommodate the electronic filing of Form NF-UIT notice filings for unit investment trusts (UITs) with the NDBF.

Developed by NASAA, the EFD System was launched in 2014 and was initially used to facilitate the filing of Form D for Regulation D, Rule 506 offerings with state securities regulators and to pay related fees.

“By continuing to embrace technology, states are providing more innovative capital formation solutions to benefit issuers and investors alike,” NDBF Deputy Director Claire McHenry said.

Nebraska is among a growing number of states participating in the online filing of Form NF-UIT and among the 48 states participating in the online EFD system for Form D.  Future system enhancements are being considered to accommodate the electronic filing of Form NF-Mutual Funds and franchise filings.

The Department’s expansion of online filing for unit investment trusts  helps grow Nebraska and further the state’s mission of creating opportunities through more effective, more efficient and consumer focused state government.

The EFD website also enables the public to search and view, free of charge, filings made through EFD with state securities regulators. EFD is available at: https://www.efdnasaa.org.

“If you have questions about a particular offering, you should contact the NDBF,” McHenry said.

Issuers or investors with questions about EFD can contact the NDBF at (402) 471-3445.

More information about the laws governing the securities industry in Nebraska can be found on NDBF’s website at www.ndbf.nebraska.gov. If you have questions about any investment matter, call NDBF’s Consumer Hotline toll free at (877) 471-3445 in Nebraska, or (402) 471-3445 if you are out of state.

Consumer Advisory - Online UIT Filings.pdf

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NEO 1 % Disaster Loans

Publication Date: Apr 18, 2019

Nebraska Energy Office 1% Energy Related Disaster loans through Nebraska Financial Institutions

The Nebraska Department of Banking and Finance and the Nebraska Energy Office (NEO) presented a webinar on April 12, 2019.   The webinar focused on the NEO Dollar and Energy Savings Loan Program 1% loans to assist those impacted by floods to repair their homes, provided the home has not been condemned. 

Please click here for a copy of the full webinar: 

NDBF & NEO 1 % Disaster Loans Webinar

Please click here for the slide deck with updated phone numbers since the call:  

Click here