NDBF COVID-19 Consumer and Industry Guidance

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News & Publications

Nebraska Department of Banking and Finance Orders Two Internet “Investment” Companies to Stop Soliciting Investors

Publication Date: Oct 20, 2020

FOR IMMEDIATE RELEASE 

CONTACT: Thomas Sindelar, Investigation Supervisor
PHONE: 402-471-2171
EMAIL: thomas.sindelar@nebraska.gov

Nebraska Department of Banking and Finance Orders Two Internet “Investment” Companies to Stop Soliciting Investors

Lincoln, Neb., October 20, 2020 – The Nebraska Department of Banking and Finance (“NDBF”) has issued Cease and Desist Orders (“Order”) against two entities that claimed to offer investments via the internet.

On August 17, 2020, NDBF issued an Order to Canadian FX Traders. The entity maintained the website, https://canfxtraders.com/, which has been deactivated. The Order prohibits the entity from offering or selling securities in Nebraska until the securities have been registered with NDBF. The Order also prohibits the entity from offering or selling securities in Nebraska until they are registered as broker-dealers or agents of a broker-dealer with NDBF.

Canadian FX Traders offered “binary options in cryptocurrency trades” to at least one Nebraska investor. This investor invested $1,500.00 with Canadian FX Traders. The company led the investor to believe that the trading had been successful as her purported balance had increased to $38,000.00. When she attempted to withdraw funds, she was informed that she needed to pay various additional fees before the funds could be withdrawn. She paid over $4,800.00 in additional fees in an attempt to withdraw her funds. Ultimately, the investor was unable to withdraw her funds and she lost her entire investment along with the additional fees she paid to Canadian FX Traders.

On September 2, 2020, NDBF issued an Order to Crypto-Initiation Company of Bournemouth, United Kingdom. The entity maintained the website, https://cryptoinitiation.com/, which has been deactivated. The Order prohibits the entity from offering or selling securities in Nebraska until the securities have been registered with NDBF. The Order also prohibits the entity named from offering or selling securities in Nebraska until they are registered as broker-dealers or agents of a broker-dealer with NDBF.

Crypto-Initiation Company offered “investment plans” which promised eight percent weekly returns to at least one Nebraska investor. The investor invested $50,000.00 in one of the investment plans. After investing, the investor was told that he needed to make an additional pledge in order to start receiving his payments. The investor increased his investment to $75,000.00 but never received his promised payments. The investor lost the entire investment.

A copy of the Cease and Desist Orders are available on NDBF’s website at www.ndbf.nebraska.gov.

NDBF strongly cautions investors on conducting business over the Internet with financial companies with whom they are unfamiliar. In many cases, the investor is told to wire money or send a prepaid card, often to a location outside the United States. In other cases, the investors are instructed to send bitcoin to fund their investment. Investors never receive the promised return and cannot recover their money. Furthermore, these investors may be asked to provide personal information such as social security numbers and bank account numbers to the Internet company, which makes them prime targets for identity theft.

More information about the laws governing the financial industries in Nebraska can be found on NDBF’s website. If you have questions about any investment matters, call NDBF at (402) 471-3445.

Crypto Cease and Desist Press Release

 Canadian FX Traders Cease & Desist Order

Crypto-Initiation Company Cease & Desist Order

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Precious Metals Investor Alert

Publication Date: Aug 28, 2020

CONTACT Claire McHenry, Deputy Director – Securities Bureau

PHONE 402-471-3445

EMAIL claire.mchenry@nebraska.gov

 

NDBF Alerts Nebraskans about Investments in Precious Metals and Self-Directed Individual Retirement Accounts

August 28, 2020 (LINCOLN, NEB.) – The Nebraska Department of Banking and Finance (NDBF) has recently received an increased volume of complaints related to investments in precious metals in self-directed individual retirement accounts. Precious metals such as gold and silver have been the subject of widespread advertising campaigns on television, online, and in print media. Such advertisements may emphasize the potential for large returns while downplaying any risks. Precious metal promotions may target seniors who may have concerns about protecting their long-term investments, including retirement accounts.

Companies may point to financial crisis or market volatility as evidence of greater stability and security available through precious metals as opposed to other investments.  Historically speaking, the value of gold-related investments fluctuates even more than the stock market. Gold often moves in reverse of stocks and bonds, so when stocks are down, gold seems like a very tempting investment.

Precious metals can be part of a well-diversified portfolio, but like all investment opportunities, an investment in precious metals involves risk. Individuals should not rely on claims in advertisements, word-of-mouth referrals, or “cold calling” tactics utilized by firms promoting these investments. Consumers should be particularly wary of aggressive sales tactics encouraging the liquidation of their existing portfolio in favor of investment in precious metals. NDBF strongly encourages any prospective investor to conduct thorough independent research on any opportunity prior to investing.

The Financial Industry Regulatory Authority (FINRA) issued an Investor Alert that provides tips for individuals considering an investment in precious metals:

  1. Say “NO” to pushy salespeople.
  2. Check out the salesperson’s background before you invest.
  3. Be on high alert when you hear “low risk”.
  4. Look out for leverage risk.
  5. Get a full accounting of fees.

Using these strategies can help you understand the benefits and risks of a prospective investment, avoid surprise costs or fees, and protect yourselves from fraud.

Self-Directed Individual Retirement Accounts (IRAs)

Precious metals companies may also encourage individuals to open a self-directed IRA. As with other IRAs, the owner of a self-directed IRA invests funds in various assets and a custodian holds the IRA on the owner’s behalf. Yet while most IRA investments are limited to common securities like stocks or bonds, self-directed IRAs allow for investment in alternative assets. These alternative assets, including cryptocurrencies and precious metals, are riskier investments than those permitted by most IRA custodians. Self-directed IRA custodians have only limited duties to make sure that the alternative assets – and the promoter selling them – are legitimate.  Unscrupulous investment promoters may exploit self-directed IRAs because they permit investors to hold riskier assets, including those not registered as securities.

Anyone considering a self-directed IRA should obtain as much information as possible prior to investing, including:

  • Duties and responsibilities of the IRA custodian.
  • Fees associated with the account.
  • Tax consequences of opening, investing in, or withdrawing from a self-directed IRA.
  • Specific details regarding the alternative assets in which funds will be invested.

NDBF also recommends working with individuals and firms that are registered to sell securities and to verify their background and registration status.  Background information on registered individuals and firms is available through NDBF. In addition, you may obtain information regarding a broker or investment adviser through FINRA’s Broker Check database at BrokerCheck.FINRA.org or through the SEC’s Investment Adviser Public Disclosure website at AdviserInfo.SEC.gov.

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 Nebraska Department of Banking and Finance at 402-471-3445.

Precious Metals Investor Alert 8.2020.pdf

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Precious Metals Enforcement

Publication Date: Sep 25, 2020

NDBF and the Office of the Nebraska Attorney General Join with CFTC to Charge Precious Metals Dealers in $185 Million Scheme Targeting Elderly Investors

Sept. 25, 2020 (LINCOLN, NE)The Nebraska Department of Banking and Finance (NDBF) and the Office of the Nebraska Attorney General announced today that they are participating in a consolidated nationwide enforcement action to halt a fraudulent precious metals scheme that has solicited $185 million from at least 1,600 seniors and other investors, including $600,000 from investors in Nebraska.

NDBF and the Office of the Nebraska Attorney General announced today that they joined the Commodity Futures Trading Commission (CFTC) and 29 other states in filing a complaint in the U.S. District Court for the Northern District of Texas alleging Metals.com and Barrick Capital Inc. defendants solicited $185 million from seniors and other vulnerable investors nationwide by touting precious metals at grossly inflated prices that were not disclosed.

“The defendants had a reckless disregard for the truth by failing to disclose that virtually every investor lost the majority of their funds in the investments the firm was peddling,” NDBF Deputy Director Claire McHenry said. “They capitalized on investor fear of market instability and economic uncertainty.  Investors suffered substantial losses from retirement savings by relying on the false representations made by the defendants and their sales representatives.”

“This historic joint effort between the CFTC and 30 state regulators is an important step toward rooting out fraud across the country,” said CFTC Chairman Heath P. Tarbert. “This case highlights just how geographically broad commodities fraud can be in our rapidly-evolving financial markets and how important it is for regulators at all levels of government to work together to pursue bad actors and protect market participants.”

The complaint names Los Angeles, California-based companies TMTE Inc., also known as Metals.com, Chase Metals Inc., Chase Metals LLC, and Barrick Capital Inc., along with Simon Batashvili, Lucas Asher, and Tower Equity LLC. The defendants are accused of using cold calling, television, radio, and social media advertisements designed to “instill fear in elderly and retirement-aged investors and build trust with investors based on representations of political or religious affinity.” Investors were advised to liquidate their holdings at registered investment firms to fund investments in precious metals bullion through self-directed individual retirement accounts and bullion coins, the complaint said.

The defendants also are accused of failing to disclose, among other things, the markup Metals.com and Barrick charged investors for their precious metals bullion products and that investors could lose the majority of their funds immediately upon completing a transaction. The defendants charged investors prices for gold or silver bullion averaging from 100% to more than 300% the melt value or spot price of that gold or silver bullion. In many cases, the market value of the precious metals sold to investors was substantially lower than the value of the securities and other retirement savings investors had liquidated to fund their purchase.

The complaint requests the Court order the defendants to cease sales activity, return money to investors, and stop defrauding investors and violating federal and state laws going forward. The complaint also requests that a receiver be appointed to take over the companies to marshal funds for the benefit of investors across the country.

Metals.com and its agents have attempted to evade previous regulatory actions from 12 states by, among other tactics, changing its business name. Today’s coordinated state and federal action to put a stop to the company’s efforts to continue to prey on elderly investors is the result of a multi-state collaboration by members of the North American Securities Administrators Association (NASAA), of which NDBF is a member, and the Commodity Futures Trading Commission’s Office of Cooperative Enforcement.

NDBF encourages investors to come forward if they suspect they have been targeted by similar precious metals investment schemes. Please contact NDBF at 402-471-3445.

Consumer Advisory - Metals.com

Metals.com Complaint

Metals.com Ex Parte Order

Metals.com Notice of Service and Lifting of the Seal

Industry Advisory

Publication Date: Jun 15, 2020

Nebraska Department of Banking and Finance Now Accepting Additional Online Corporation Finance Filings

June 15, 2020 (LINCOLN, NE) –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 a greater range of corporation finance materials with the agency.

“We are pleased to continue to modernize and streamline the filing process and offer additional efficiencies for issuers,” said NDBF Deputy Director Claire McHenry.

The new functionality, referred to as “Universal Filing Type,” allows filers to submit electronic filings to the NDBF for a variety of corporation finance offerings not previously available through EFD and to pay associated fees. These offerings include, among others, registrations by coordination and qualification, Regulation A (Tier 1 and Tier 2), crowdfunding (federal and state), and franchise filings. The expanded functionality also facilitates the filing of materials such as issuer-agent registrations.

Developed by NASAA, of which the NDBF is a member, 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. The system was expanded last year to accommodate Form NF-UIT notice filings for unit investment trusts (UITs) with the NDBF. Future system enhancements are being considered to accommodate the electronic filing of Form NF-Mutual Funds.

The EFD website also enables the public to search and view, free of charge, Reg. D Rule 506 and Form NF-UIT filings made through EFD. EFD is available at: https://www.efdnasaa.org.

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

Issuers or investors with questions about EFD can contact the NDBF at DOB.SecuritiesFiling@nebraska.gov or 402-471-3445.

Expanded EFD Functionality

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Single Bank Pooled Collateral Administrator Designated RFP 2020-001

Publication Date: May 1, 2020

May 1, 2020.  Nebraska Department of Banking and Finance Director Mark Quandahl has designated the Nebraska Bankers Insurance and Services Company (NBISCO) as the Administrator of the Single Bank Pooled Collateral program for the State of Nebraska.

COVID-19 Investment Threats

Publication Date: Apr 21, 2020

COVID-19-Related Investment Schemes Anticipated

 

April 21, 2020 (LINCOLN, NEB.)  — Amid the ongoing COVID-19 pandemic, the Nebraska Department of Banking and Finance (NDBF) is alerting investors to be on guard against an anticipated surge of fraudulent investment schemes.

“In these extraordinary times, the health and welfare of all must be our foremost concern, and that includes our financial health. Our focus remains on the protection of Nebraska investors,” said NDBF Deputy Director Claire McHenry.

NDBF warns investors that the fraudulent schemes launched amid COVID-19 outbreak will not be elegant. “Scammers will create schemes that require little or no advance planning and little sophistication,” Deputy Director McHenry said. “Most will simply be old scams dressed in new clothes.”

The North American Securities Administrators Association, of which NDBF is a member, anticipates fraudulent investment schemes will rise as a result of the ongoing pandemic. “Scammers will be targeting investors, taking advantage of recent developments in the economy, and preying on concerns about the regulated securities market,” said Deputy Director McHenry. “Investors must remain cautious to protect themselves.”

In particular, NDBF warns investors to be on the lookout for investments specifically tied to the threat of COVID-19. Scammers can be expected to develop schemes that falsely claim to raise capital for companies manufacturing surgical masks and gowns, producing ventilators and other medical equipment, distributing small-molecule drugs and other preventative pharmaceuticals, or manufacturing vaccines and miracle cures. The schemes often appear legitimate because they draw upon current news, medical reports, and social and political developments. 

Scammers also will seek to take advantage of concerns with the volatility in the securities markets to promote “safe” investments with “guaranteed returns” including investments tied to gold, silver and other commodities; oil and gas; and real estate. Investors also can expect to see “get rich quick” schemes that promise quickly earned guaranteed returns that can be used to pay for rent, utilities or other expenses. These schemes also target retirees and senior citizens, falsely claiming they can quickly and safely recoup any losses to their retirement portfolios.

Investors must remain vigilant and protect themselves from new schemes tied to COVID-19 and recent economic developments. NDBF warns investors to stay clear of anything sounding too good to be true, such as guarantees of high returns with no risk, and to verify the licenses and registrations of investment professionals. 

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 - COVID-19 Investment Threats

Consumer Advisory - COVID-19 Related Schemes to Watch For

Consumer Advisory - How to Protect Yourself from COVID-19 Scams

 

Intent to Award RFP 2020-001

Publication Date: Apr 16, 2020

Notice of Intent to Award

And

Public Comment Period

April 16, 2020

 

The Nebraska Department of Banking and Finance states its intention to designate an Administrator of the Single Bank Pooled Method (SBPM) on or about May 1, 2020.

Pursuant to:  Nebraska Department of Banking and Finance RFP 2020-001

For:     Administrator of Single Bank Pooled Method

Intended appointee:   Nebraska Bankers Insurance and Services Company (NBISCO)

Any member of the public may comment on this notice of intent to award, the contents of RFP 2020-001, the intended appointee and the proposal response of the Nebraska Bankers and Insurance and Services Company from this date until 5:00 pm (the close of business) on April 30, 2020 by emailing said comments to mark.quandahl@nebraska.gov

 

Nebraska Department of Banking and Finance

By Mark Quandahl, Director

 

Notice of Intent to Award.pdf

 

Consumer Advisory

Publication Date: Apr 2, 2020

Omaha Man Ordered to Stop Misleading Investors

 

April 2, 2020 (LINCOLN, NEB.)  — The Nebraska Department of Banking and Finance (NDBF) issued a Cease and Desist Order against an Omaha man, Amogh Karney (“Karney”), in connection to his 2019 offer and sale of investment interests in an entity known as ARK Capital, LLC (“ARK”). The Order includes Karney’s affiliates, control persons, officers, directors, agents, employees and successors.

 

According to the Order, Karney offered and sold securities in ARK.  Karney provided a potential investor with information that falsely stated that an Omaha business owner was an investor in ARK.

 

The Order prohibits Karney from making any untrue statements of material facts in connection with the offer and sale of securities.  The Order also prohibits Karney from omitting material facts in connection with the offer and sale of securities.

 

Individuals who purchased securities from Karney are asked to contact the Department.

 

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 - Amogh Karney

RFP 2020-001 Schedule Update

Publication Date: Mar 30, 2020

Please note the updates to the schedule for RFP 2020-001.

Activity
Date/Time

5. Oral Interviews, Presentations and/or Demonstrations
03/13/2020 through 04/03/2020

6. Post “Notification of Intent to Appoint” on internet 

04/10/2020

7.  Public Comment Period
04/13/2020 through 04/27/2020

8.  Contract Finalization period  
04/10/2020 through 04/30/2020

9.  Designation/appointment       
05/01/2020*

10.  Protest Period for non-appointed applicants 
05/04/2020 through 05/15/2020*

11.  Administrator Start Date   
07/01/2020*

* Unchanged from previous activity schedule of events

 

RFP 2020-001 Schedule Update 20200330

NDBF Temporarily Suspends Examinations

Publication Date: Mar 25, 2020

March 25, 2020

Statement from Nebraska Department of Banking and Finance regarding Examinations of Financial Institutions during the COVID-19 Emergency

For all Nebraska State chartered, licensed, and supervised depository and non-depository financial institutions:

  • The Nebraska Department of Banking and Finance (Department) will temporarily cease all regular examination activity effective March 25, 2020, except where the examination work is critical to safety and soundness, consumer protection, or is required to address an urgent or immediate need.

  • The Department will reassess its approach to examinations on April 24, 2020 or when the emergency has concluded, whichever is sooner.

  • The Department’s action will allow financial institutions to prioritize working with their customers during the COVID-19 emergency.

  • The institution may elect to move forward with a Department examination if it has previously provided a majority of the requested information; however, the determination to proceed will be left up to the institution.

  • The Department’s action to temporarily cease examinations follows federal regulators such as the FDIC and Federal Reserve Bank.

  • Additional time will be granted to resolve non-critical existing supervisory findings.

  • Please contact Greg Freese at greg.freese@nebraska.gov with examination questions regarding banks, credit unions, or trust companies or Scott Peter at scott.peter@nebraska.gov for examination questions of mortgage companies, delayed deposit services, installment loan companies, and money transmitters.  Both can also be reached at the Department’s main phone number: 402-471-2171.

     

Beware of Con Artists - COVID-19

Publication Date: Mar 9, 2020

NDBF Urges Nebraskans to Beware of Con Artists Looking to Profit from Coronavirus Fear and Uncertainty

March 9, 2020 (LINCOLN, NEB.)  — In light of the ongoing developments related to the current coronavirus (COVID-19) situation, and its impact on financial markets, the Nebraska Department of Banking and Finance (NDBF) is urging Nebraskans to beware of con artists seeking to capitalize on fear and uncertainty.

 

“We know con artists are opportunistic and use current events to cloak their schemes with an air of immediacy and legitimacy. Never make an investment decision without understanding what you are investing in, who you are doing business with, where your money is going, how it will be used, and how you can get it back,” said NDBF Deputy Director Claire McHenry. “Always ask if the salesperson and the security are registered with their state or provincial securities regulator.”

 

Deputy Director McHenry also said investors should be on the lookout for scam artists trying to use the market downturn and the coronavirus to scare investors into so-called “safer, guaranteed investments.” “If you have concerns about your retirement accounts or investments, talk to your financial professional,” Deputy Director McHenry said. “Avoid making decisions based on panic or fear.”

 

To help investors identify common telltale signs of possible investment fraud, NDBF has provided three questions to ask before making a new investment.

 

  • First, is the investment being offered with a guaranteed high return with little or no risk?

All investments carry risk that you may potentially lose some or all of your money. Anyone who says their investment offer has no risk is lying. No one can guarantee an investment return.

  • Second, is there a sense of urgency or limited availability surrounding the investment?

If the offer is legitimate, it will be there later. If someone offers you a “can’t miss” investment opportunity and puts you on the spot, do not be afraid to walk away.

  • Third, is the person offering the investment, and the investment itself, properly licensed or registered?

For the same reasons you would not go to an unlicensed doctor or dentist, you should avoid unregistered investment salespeople and their products.

“Make sure you have all the facts before you hand your money over to someone else to invest,” Deputy Director McHenry said. Deputy Director McHenry also encourages investors to contact NDBF with any questions about the investment professional they are working with or the product being offered.

 

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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Press Release - Coronavirus March 9 2020.pdf

DDS LICENSE RENEWAL DEADLINE

Publication Date: Mar 6, 2020

 

DDS LICENSE RENEWAL DEADLINE

News Release Date: March 04, 2020

NDBF REMINDS DDS LICENSEES OF May 1, 2020 RENEWAL DEADLINE

The Nebraska Department of Banking and Finance ("NDBF") reminds DDS licensees holding an active Delayed Deposit Services license in Nebraska that it will expire on May 1, 2020.

Nebraska Statutes require that each Delayed Deposit Services Business renew its license annually. Be advised that Section 45-926 of the Delayed Deposit Services Licensing Act prohibits the operation of a Delayed Deposit Services business without a license. Your current license will expire on May 1, 2020.

The 2020 Delayed Deposit Services Renewal Licensing Forms and Instructions are available on the Department web site at https://ndbf.nebraska.gov/industries/delayed-deposit-services-payday-len.... Licensees must use the licensing forms provided on the Department’s website. Forms from previous years will not be accepted.

To renew a DDS Business License, a licensee must submit the following:

1) Delayed Deposit Services Business License Renewal Application and Fee- MUST BE MAILED TO THE NEBRASKA DEPARTMENT OF BANKING AND FINANCE AND BE POSTMARKED NO LATER THAN APRIL 10, 2020.

Companies holding licenses in more than one county, all principal places of business and branches may be submitted on one application.

When you submit the license renewal application, you must include the appropriate renewal fees. The renewal fee is $500 for each principal place of business and $500 for each branch office.

2) Delayed Deposit Services Licensee Annual Report and Supplemental Annual Report for 2019- MUST BE ELECTRONICALLY SUBMITTED TO DOB.CONSUMERFINANCE@NEBRASKA.GOV NO LATER THAN APRIL 10, 2020.

Annual Report and Supplemental Annual Report for 2019 must be submitted for each license #.

3) Delayed Deposit Services Licensee Annual Report- Affidavit

Upon approval of the Annual Report and Supplemental Annual Report, the Department will email the Licensee’s Primary Contact the required Affidavit to be signed and notarized. The individual signing this form is

 

affirming that to the best of his or her knowledge the information contained in the Annual Report is true.

The completed Affidavit MUST BE MAILED TO THE NEBRASKA DEPARTMENT OF BANKING AND FINANCE.

ONCE APPROVED, RENEWAL LICENSES AND CERTIFICATES OF BRANCH APPROVAL WILL BE MAILED TO THE PRINCIPAL PLACE OF BUSINESS.

You must still file an Annual Report and Supplemental Annual Report, even if you are not renewing your DDS license.

If you have questions, please email dob.consumerfinance@nebraska.gov and include your company name and license number in the subject line or call 402-471-2171.

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