The Board of Governors of the Federal Reserve System is issuing this SR/CA letter to provide guidance to banking organizations under its supervision of requirements for filing notice of proposed settlements of class action litigation.
The Class Action Fairness Act of 2005, Pub.L. No. 109-2, 119 Stat. 4 (2005) (codified at 28 U.S.C. § 1715), requires financial institutions that are defendants in class action litigation to file with their primary Federal banking regulator (and, in the case of state-chartered institutions in the United States, with their state banking supervisor) a notice of any proposed settlement of such litigation if any of the matters alleged in the action are subject to regulation or supervision by such agencies. The notice requirements apply to federal and state depository institutions, depository institution holding companies, foreign banks, and non-depository institution subsidiaries of any of the foregoing entities. Within 10 days after the filing of a proposed class action settlement agreement with the court, any defendant financial institution covered by the law and supervised by the Federal Reserve should send notice of the proposed settlement to the General Counsel at the responsible Federal Reserve Bank. Such notice should include the materials described in 28 U.S.C. § 1715(b).
The notice required to be filed with the Federal Reserve Bank must also be filed with the financial institution’s state bank supervisor, if any.
The notice requirements described above apply only when at least one matter at issue in the litigation is subject to regulation or supervision by the regulator. For example, settlement of a class action involving lending practices would give rise to the notice requirements described above, while a lawsuit involving only personnel issues would not.
A proposed settlement of class action litigation subject to these notice requirements may not be finally approved by the court until 90 days after service of the requisite notice on the appropriate Federal financial institutions regulator (and, where applicable, upon the appropriate state bank supervisor).
Reserve Banks are asked to distribute this SR/CA letter to the domestic and foreign banking organizations supervised by the Federal Reserve in their districts as well as to supervisory and examination staff. Questions regarding these notice requirements may be directed to Lisa M. Villarreal, Counsel, Division of Banking Supervision and Regulation, at (202) 721-4570, Steve Meyer, Assistant General Counsel, Legal Division, at (202) 452-2522, or Paul Robin, Manager, Division of Consumer and Community Affairs, at (202) 452-3140.