FOR IMMEDIATE RELEASE
January 14, 2010
Contact: Jason Moon 517-335-1700
http://twitter.com/miofir

LANSING –Office of Financial and Insurance Regulation (OFIR) Commissioner Ken Ross today released the agency’s nine key accomplishments for 2009.

“Despite the turbulence in the financial service sector in 2009, OFIR strengthened our oversight of the mortgage and securities industries, ended emerging financial scams, continued our fight against the unfair practice of insurance credit scoring and recovered a record amount money for Michigan consumers,” Ross said.

OFIR’s nine key accomplishments for 2009:

Auction Rate Securities Settlements (ARS): OFIR continued to reach settlements with brokerage firms regarding ARS that requires the firms to offer full buybacks to any eligible customer who purchased an ARS. The settlements also require the firms to pay fines to the state. OFIR now has ARS settlements with six firms totaling in offers for full buybacks of more than $3.5 billion to Michigan consumers and payments of more than $6.5 million to the state.

Mortgage Loan Officer Registration: OFIR began registering the state’s mortgage loan officers. The registration strengthens the state's oversight of the loan industry's practices by mandating background checks and educational training for loan officers. Over 3,000 loan officers have registered to date.

Uniform Securities Act (USA): OFIR worked closely with the legislature on USA, which went into effect October 1, 2009. USA provides enhanced civil and criminal actions against perpetrators of securities fraud. The legislation also creates the Michigan Investor Education Fund, which will be funded entirely by securities fines and will be used solely for educating Michigan consumers on investment issues and how to avoid financial scams.

$50 Million Ponzi Scheme: The SEC halted an alleged Ponzi scheme being conducted in the Detroit area by John Bravata and his company BBC Equities The SEC alleges that Bravata raised more than $50 million from at least 440 investors by offering them membership interests in a purported real estate investment fund. OFIR notified the SEC earlier this year about the alleged Ponzi scheme after receiving consumer complaints and conducting its own investigation into BBC and Bravata. In March, OFIR ordered the companies to cease and desist from selling unregistered securities in the state.

Fake Financial Institutions: OFIR successfully shut down several fake financial entities that were posing as legitimate businesses in an attempt to steal consumers' money and identity. Through their websites, the fraudulent financial institutions were encouraging customers to apply for loans by providing upfront payments and personal information. OFIR ordered the fake companies to cease and desist form doing business and contacted their websites’ hosts. The websites were then shut down.

Credit Scoring Hearing: The Michigan Supreme Court heard OFIR’s appeal regarding the agency’s rules to ban the use of insurance credit scoring. In 2005, OFIR promulgated rules banning the use of insurance credit scoring. The agency is hopeful the court will soon decide in favor of Michigan drivers.

Disapproving Auto/Home Rates Based on Credit Scoring: OFIR began disapproving insurance rate filings made by auto and home insurance companies that use insurance credit scoring as a factor in determining their premiums. OFIR determined that premiums developed using credit scoring do not meet the requirements of Michigan’s Insurance Code. The insurance industry sued the agency and the matter is before the State Court of Appeals.

Consumer Recoveries: OFIR recovered a record $33,025,231 on behalf of Michigan consumers in 2009. The $33 million in consumer recoveries breaks the previous record of $17 million set by the agency in 2008. The rise in consumer recoveries can largely be attributed to an increase in the amount of mortgage modifications OFIR assisted in last year.

Wellness Plan: OFIR's released The Wellness Plan (TWP), formerly a Detroit-based HMO, from a successful rehabilitation. The rehabilitation process allowed OFIR to restore TWP to financial solvency, and to transform the company into a clinic network focused squarely on serving the community. TWP is now a vital alliance of three state-of-the-art Federally Qualified Health Centers (FQHC) serving the Greater Detroit area.

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