What sports team would decline the chance to peek at their opponent’s playbook? Very few, I imagine. Yet anyone being investigated by the Consumer Financial Protection Bureau now has that opportunity—by studying the bureau’s policies and procedures manual, recently made public through a Freedom of Information Act request.
Kudos to attorney Jonathan Pompan at the law firm of Venable, LLP, for requesting the CFPB’s enforcement manual (part 1 and part 2) and then posting it on the internet. The manual is a trove of information about the inner workings of the bureau, explaining its differing levels of investigation, approval requirements, and policy recommendations. Even the typeface to be used in official correspondence is spelled out.
Any business or individual hit with an enforcement action or civil investigative demand (CID) would do well to become familiar with this resource. Not only does the manual describe how bureau staff are to handle CIDs and enforcement actions, but it also lays out the process for proceeding from a research matter (a confidential, behind-the-scenes inquiry to see if further analysis is warranted) to an investigation (a formal fact-gathering process that can lead to an enforcement action).
To me, one of the most revealing parts of the manual is the section devoted notifications of purpose. Those are supposed to alert responding parties to “the nature of the conduct constituting the alleged violation that is under investigation and the provisions of the law applicable to such violation.” The CFPB recognizes that this requirement could force it to tip its investigative hand too much, so it offers a stock of canned paragraphs that can be used to obscure the true focus of the inquiry yet still comply with the law.
Another fascinating aspect of the manual is its explanation about why the bureau never admits that anyone is a target of investigation:
“Target” is a term of art in criminal law that carries a specific meaning with legal consequences. In the grand jury process, individuals are often identified as the target of a criminal investigation, and that characterization has important Fifth and Sixth Amendment implications. Because Bureau investigations are civil, the notification of “targets” is not required. Furthermore, the term “target” incorrectly implies that the objective of an Enforcement investigation is to reach a specific result (legal action against the target) rather than to search for the truth. Although some parties involved in investigations eventually may be named as defendants or respondents in subsequent litigation, the Bureau does not have targets of its preliminary inquiries or investigations. Therefore, [bureau] Staff should never use the designation “target” to describe the subjects of Enforcement investigations.