Category: Finance Companies

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Tradewind Finance announces US$ 1bln in funding globally

Tradewind Finance announces US$ 1bln in funding globally

Dubai, UAE: Top intercontinental trade finance firm Tradewind Finance has announced the completion of its US$1 billion funding for 2022 – a improvement that’s greatly predicted to noticeably bridge the money gap for exporters throughout the globe.

In accordance to the spokesperson, the extension of liquidity by the money move administration company proceeds to be instrumental in supporting exporters to scale up their pursuit of much-required expansion.

The funding will also enable exporters to spend supplemental cash into their organizations – from their workforce to ESG initiatives – as well as conveniently meet up with other equally-critical performing cash requirements.

“We are energized to announce the completion of US$1 billion funding for 2022. This is a phenomenal accomplishment not just for Tradewind Finance but most importantly for the many exporters who are experiencing funding bottlenecks and are not able to increase their businesses. This funding arrives at the appropriate time as most exporters are rebuilding their functions on the back again of a world wide wellbeing disaster. Sustainable business progress is an essential part, primarily in the exports company and we consider this funding is heading to give the exporters with the appropriate aid to scale up,” mentioned Peter Maerevoet, Worldwide CFO and Regional CEO for Asia at Tradewind Finance.

Tradewind Finance, which has a properly-diversified portfolio of purchasers spanning all continents, also expects additional funding of additional than US$3 billion by the conclusion of 2022. The supplemental resources will be applied to support export providers that trade internationally seamlessly navigate the present-day supply chain difficulties and be in a much better situation to contend proficiently.

The funding also offers providers prospects to extend their solution offerings, associate with massive-identify customers who inquire for more time payment phrases, and enter new marketplaces securely. In addition to the funding, its trade finance offers involve credit rating defense and collections services.

Export businesses that qualify for the funding will get among US$250,000 to US$30 million based mostly on the company’s specifications. In the UAE, Tradewind Finance has presented funding to businesses that export products, packaging, automotive components, and electronics with most of these providers getting purchasers located in the GCC area.

For above 20 several years, Tradewind Finance has aided export corporations in successfully meeting their economical obligations and necessities via the provision of funding. The money injection has, in transform, aided export firms to significantly improve their in general income flow, enabling them to scale up their export orders.

-Finishes-

About Tradewind Finance

Founded in 2000, Tradewind Finance maintains a network of workplaces all more than the world, including Bangladesh, Brazil, Bulgaria, China, Hong Kong SAR, Hungary, Iceland, India, Pakistan, Peru, Turkey, UAE, and the United states of america as perfectly as the headquarters in Germany. Combining financing, credit history defense, and collections into a one suite of trade finance merchandise, Tradewind delivers streamlined, adaptable, and finest-in-course services to the world’s exporters and importers.

For editorial enquiries, remember to get hold of Matrix PR
Krishika Mahesh – krishika@matrixdubai.com
Ambika Jadeja – ambika@matrixdubai.com

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Portman Ridge Finance Corporation Announces First Quarter

Portman Ridge Finance Corporation Announces First Quarter

Well Positioned to Further Improve Portfolio Performance and Increase Investment Income in 2022;
Refinances JPMorgan Chase Bank (“JPM”) Credit Facility and Reduces Cost of Capital

Declares Quarterly Distribution of $0.63 Per Share

NEW YORK, May 10, 2022 (GLOBE NEWSWIRE) — Portman Ridge Finance Corporation (Nasdaq: PTMN) (the “Company” or “Portman Ridge”) announced today its financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Net asset value (“NAV”) for the first quarter of 2022 remained relatively flat at $278.3 million ($28.76 per share1) as compared to $280.1 million ($28.88 per share) in the fourth quarter of 2021, despite pervasive market volatility and other macro-economic and political factors.
  • Total investment income the first quarter of 2022 was $16.9 million, of which $13.0 million was attributable to interest income from the debt securities portfolio.
  • Excluding the impact of purchase price accounting, core investment income2 for the first quarter of 2022 was $15.1 million.
  • Net investment income (“NII”) for the first quarter of 2022 was $7.9 million ($0.82 per share).
  • Total investments at fair value as of March 31, 2022 was $568.0 million; when excluding CLO Funds, Joint Ventures and short-term investments, these investments are spread across 30 different industries and 116 entities with an average par balance per entity of approximately $3.3 million.
  • As of March 31, 2022, six of the Company’s debt investments were on non-accrual status compared to seven as of December 31, 2021.
  • As of March 31, 2022, par value of outstanding borrowings was $352.4 million with an asset coverage ratio of total assets to total borrowings of 180{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. On a net basis, leverage as of March 31, 2022 was 0.97x.3
  • During the quarter, the Company restructured its stock buybacks and repurchased 22,990 of shares under its Renewed Stock Repurchase program at an aggregate cost of approximately $545 thousand.

_____________________________
1 NAV per share as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, was decreased 5 cents per share due to the impact of a one-time quarterly tax provision.
2 Core investment income represents reported total investment income as determined in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, less the impact of purchase price discount accounting in connection with the Garrison Capital Inc. (“GARS”) and Harvest Capital Credit Corporation (“HCAP”) mergers. Portman Ridge believes presenting core investment income and the related per share amount is useful and appropriate supplemental disclosure for analyzing its financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, core investment income is a non-U.S. GAAP measure and should not be considered as a replacement for total investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, core investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance.
3 Net leverage is calculated as the ratio between (A) debt, excluding unamortized debt issuance costs, less available cash and cash equivalents, and restricted cash and (B) NAV. Portman Ridge believes presenting a net leverage ratio is useful and appropriate supplemental disclosure because it reflects the Company’s financial condition net of $83.6 million of cash and cash equivalents. However, the net leverage ratio is a non-U.S. GAAP measure and should not be considered as a replacement for the regulatory asset coverage ratio and other similar information presented in accordance with U.S. GAAP. Instead, the net leverage ratio should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial condition.

Subsequent Events

  • Declared a stockholder distribution of $0.63 per share for the second quarter of 2022, payable on June 7, 2022 to stockholders of record at the close of business on May 24, 2022.
  • On April 29, 2022, the Company refinanced its Revolving Credit Facility with JPMorgan Chase Bank as administrative agent. The amended agreement places three-month SOFR as the benchmark interest rate and reduces the applicable margin to 2.80{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} per annum from 2.85{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} per annum. Other amendments include the extension of the reinvestment period and scheduled termination date to April 29, 2025 and April 29, 2026, respectively.

Management Commentary
Ted Goldthorpe, Chief Executive Officer of Portman Ridge, stated, “Despite operating in an environment with rising interest rates, market volatility, and the war in the Ukraine, we reported a relatively unchanged NAV per share for the first quarter, reduced our non-accruals, and maintained our dividend of $0.63 per share. While many of our peers have seen raised interest rates on their lines of credit and outstanding debt, we have been able to restructure our agreement with JPMorgan Chase and lower the interest rate, shift from LIBOR to SOFR, and extend the maturity date by 2 ½ years. Although investment activity and originations were lower in the first quarter of 2022 as compared to the second half of 2021, a sector-wide trend, subsequent to quarter end we have deployed approximately $35 million of our available cash in new investments and have a pipeline of an additional $20 million to $30 million we expect to deploy before the end of the second quarter. We are also pleased to announce that we have added two new seasoned members to our board. Overall, we believe that we are well-positioned to further improve our portfolio performance and increase investment income in 2022.”

Select Financial Highlights

    For the Three Months Ended March 31,
  
    2022     2021  
Total Investment Income     16,944       18,305  
Total Expenses     9,036       10,092  
Net Investment Income     7,908       8,213  
                 
Net realized gain (loss) on investments     (5,553 )     (5,086 )
Net unrealized gain (loss) on investments     2,143       6,745  
Tax (provision) benefit on realized and unrealized gains (losses) on investments     (440 )     –  
Net realized and unrealized appreciation (depreciation) on investments, net of taxes     (3,850 )     1,659  
Realized gains (losses) on extinguishments of debt     –       (1,835 )
Net Increase (Decrease) in Net Assets Resulting from Operations   $ 4,058     $ 8,037  
Net Increase (Decrease) In Stockholders’ Equity Resulting from Operations per Common Share (4):            
Basic and Diluted:   $ 0.42     $ 1.07  
Net Investment Income Per Common Share (4):            
Basic and Diluted:   $ 0.82     $ 1.09  
Weighted Average Shares of Common Stock Outstanding—Basic and Diluted (4)     9,698,099       7,517,453  

4 The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021. As a result, the share and per share amounts have been adjusted retroactively to reflect the split for all periods prior to August 26, 2021.

     
($ in thousands)   For the Three Months Ended March 31, 2022
Interest from investments in debt excluding accretion   $ 9,812  
Purchase discount accounting     1,812  
PIK Investment Income     1,382  
CLO Income     1,634  
JV Income     2,108  
Service Fees     196  
Total Investment Income     16,944  
Less: Purchase discount accounting     (1,812 )
Core Investment Income     15,132  

Total investment income for the three months ended March 31, 2022 and March 31, 2021 was $16.9 million and $18.3 million, respectively. Total expenses for the three months ended March 31, 2022 and March 31, 2021 were $9.0 million and $10.1 million, respectively.

At both March 31, 2022 and December 31, 2021, the weighted average contractual interest rate on our interest earning debt securities portfolio was approximately 8.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

Investment Portfolio Activity
The composition of our investment portfolio as of March 31, 2022 and December 31, 2021 at cost and fair value was as follows:

             
($ in thousands)   March 31, 2022
(unaudited)		   December 31, 2021
Security Type   Cost/Amortized
Cost		     Fair Value     {21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}(5)     Cost/Amortized
Cost		     Fair Value     {21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}(¹)  
Senior Secured Loan   $ 394,552     $ 395,062       69     $ 361,556     $ 364,701       66  
Junior Secured Loan     69,795       60,976       11       82,996       70,549       13  
Senior Unsecured Bond     416       43       0       416       43       0  
Equity Securities     24,637       22,633       4       26,680       22,586       4  
CLO Fund Securities     51,163       29,057       5       51,561       31,632       6  
Asset Manager Affiliates(6)     17,791       —       —       17,791       —       —  
Joint Ventures     65,305       60,217       11       64,365       60,474       11  
Derivatives     31       23       —       31       (2,412 )     —  
Total   $ 623,690     $ 568,011       100 {21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}   $ 605,396     $ 547,573       100 {21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}

5Represents percentage of total portfolio at fair value.
6Represents the equity investment in the Asset Manager Affiliates.

As of March 31, 2022, six of the Company’s debt investments were on non-accrual status compared to seven investments on a non-accrual status as of December 31, 2021. Investments on non-accrual status as of March 31, 2022 decreased to 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 1.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the Company’s investment portfolio at fair value and amortized cost, respectively, compared to 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 2.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} as of December 31, 2021.

Liquidity and Capital Resources
As of March 31, 2022, we had $352.4 million (par value) of borrowings outstanding with a weighted average interest rate of 3.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, of which $108.0 million par value had a fixed rate and $244.4 million par value had a floating rate. Portman Ridge expects future portfolio investments to predominately be floating rate investments.

As of March 31, 2022, the Company had unrestricted cash of $20.5 million and restricted cash of $63.1 million. This compares to unrestricted cash of $28.9 million and restricted cash of $39.4 million as of December 31, 2021. As of March 31, 2022, we had $34.4 million of available borrowing capacity under the Senior Secured Revolving Credit Facility, and $25.0 million of borrowing capacity under the 2018-2 Revolving Credit Facility.

Total assets and shareholder’s equity as of March 31, 2022 were $660.9 million and $278.3 million respectively, as compared to $648.3 million and $280.1 million, respectively as of December 31, 2021.

As of March 31, 2022 and December 31, 2021, the fair value of investments and cash were as follows:

($ in thousands)      
Security Type   March 31, 2022   December 31, 2021
Cash and cash equivalents   $ 20,524     $ 28,919  
Restricted Cash     63,094       39,421  
Senior Secured Loan     395,062       364,701  
Junior Secured Loan     60,976       70,549  
Senior Unsecured Bond     43       43  
Equity Securities     22,633       22,586  
CLO Fund Securities     29,057       31,632  
Joint Ventures     60,217       60,474  
Derivatives     23       (2,412 )
Total   $ 651,629     $ 615,913  


Interest Rate Volatility
The Company’s investment income is affected by fluctuations in various interest rates, including LIBOR and prime rates.

As of March 31, 2022, approximately 87{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the Company’s debt securities portfolio were either floating rate with a spread to an interest rate index such as LIBOR or the prime rate. 76.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of these floating rate loans contain LIBOR floors ranging between 0.50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} and 2.00{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.

In periods of rising or lowering interest rates, the cost of the portion of debt associated with the 4.875{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} Notes Due 2026 would remain the same, given that this debt is at a fixed rate, while the interest rate on borrowings under the Revolving Credit Facility would fluctuate with changes in interest rates.

Generally, an increase in the base rate index for floating rate investment assets would increase gross investment income and a decrease in the base rate index for such assets would decrease gross investment income (in either case, such increase/decrease may be limited by interest rate floors/minimums for certain investment assets).

    Impact on net investment income from
a change in interest rates at:
    ($ in thousands)
    1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}   2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}   3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
Increase in interest rate   $ 1,523     $ 3,167     $ 4,814  
Decrease in interest rate   $ 746     $ 746     $ 746  

Net investment income assuming a 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in interest rates would increase by approximately $1.5 million on an annualized basis. If the increase in rates was more significant, such as 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} or 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, the net effect on net investment income would be an increase of approximately $3.2 million and $4.8 million, respectively.

On an annualized basis, a decrease in interest rates of 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} or 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} would result in an increase in net investment income of approximately $746 thousand. The effect on net investment income from declines in interest rates is impacted by interest rate floors on certain of our floating rate investments, as there is no floor on our floating rate debt facility and the 2018-2 Secured Notes.

Conference Call and Webcast
We will hold a conference call on Wednesday, May 11, 2022 at 9:00 am Eastern Time to discuss our first quarter 2022 financial results. To access the call, stockholders, prospective stockholders and analysts should dial (866) 757-5630 approximately 10 minutes prior to the start of the conference call and use the conference ID 5981065.

A replay of this conference call will be available from approximately 12:00 p.m. ET on May 11 through May 18. The dial in number for the replay is (855) 859-2056 and the conference ID is 5981065.

A live audio webcast of the conference call can be accessed via the Internet, on a listen-only basis on the Company’s website www.portmanridge.com in the Investor Relations section under Events and Presentations. The webcast can also be accessed by clicking the following link: Portman Ridge First Quarter 2022 Conference Call. The online archive of the webcast will be available on the Company’s website shortly after the call.

About Portman Ridge Finance Corporation
Portman Ridge Finance Corporation (Nasdaq: PTMN) is a publicly traded, externally managed investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940. Portman Ridge’s middle market investment business originates, structures, finances and manages a portfolio of term loans, mezzanine investments and selected equity securities in middle market companies. Portman Ridge’s investment activities are managed by its investment adviser, Sierra Crest Investment Management LLC, an affiliate of BC Partners Advisors, LP.

Portman Ridge’s filings with the Securities and Exchange Commission (the “SEC”), earnings releases, press releases and other financial, operational and governance information are available on the Company’s website at www.portmanridge.com.

About BC Partners Advisors L.P. and BC Partners Credit
BC Partners is a leading international investment firm with over $40 billion of assets under management in private equity, private credit and real estate strategies. Established in 1986, BC Partners has played an active role in developing the European buyout market for three decades. Today, BC Partners executives operate across markets as an integrated team through the firm’s offices in North America and Europe. Since inception, BC Partners has completed 117 private equity investments in companies with a total enterprise value of €149 billion and is currently investing its eleventh private equity fund. For more information, please visit www.bcpartners.com.

BC Partners Credit was launched in February 2017 and has pursued a strategy focused on identifying attractive credit opportunities in any market environment and across sectors, leveraging the deal sourcing and infrastructure made available from BC Partners.

Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements. The matters discussed in this press release, as well as in future oral and written statements by management of Portman Ridge Finance Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements.

Forward-looking statements relate to future events or our future financial performance and include, but are not limited to, projected financial performance, expected development of the business, plans and expectations about future investments and the future liquidity of the Company. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “outlook”, “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Forward-looking statements are based upon current plans, estimates and expectations that are subject to risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements.

Important assumptions include our ability to originate new investments, and achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this press release should not be regarded as a representation that such plans, estimates, expectations or objectives will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) uncertainty of the expected financial performance of the Company; (2) expected synergies and savings associated with merger transactions effectuated by the Company; (3) the ability of the Company and/or its adviser to implement its business strategy; (4) evolving legal, regulatory and tax regimes; (5) changes in general economic and/or industry specific conditions; (6) the impact of increased competition; (7) business prospects and the prospects of the Company’s portfolio companies; (8) contractual arrangements with third parties; (9) any future financings by the Company; (10) the ability of Sierra Crest Investment Management LLC to attract and retain highly talented professionals; (11) the Company’s ability to fund any unfunded commitments; (12) any future distributions by the Company; (13) changes in regional or national economic conditions, including but not limited to the impact of the COVID-19 pandemic, and their impact on the industries in which we invest; and (14) other changes in the conditions of the industries in which we invest and other factors enumerated in our filings with the SEC. The forward-looking statements should be read in conjunction with the risks and uncertainties discussed in the Company’s filings with the SEC, including the Company’s most recent Form 10-K and other SEC filings. We do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required to be reported under the rules and regulations of the SEC.

Contacts:
Portman Ridge Finance Corporation
650 Madison Avenue, 23rd floor
New York, NY 10022
info@portmanridge.com

Jason Roos
Chief Financial Officer
Jason.Roos@bcpartners.com
(212) 891-2880

Lena Cati
The Equity Group Inc.
lcati@equityny.com
(212) 836-9611

Serena Liegey
The Equity Group Inc.
sliegey@equityny.com
(212) 836-9630

PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

    March 31, 2022     December 31,
2021		  
    (Unaudited)        
ASSETS            
Investments at fair value:            
Non-controlled/non-affiliated investments (amortized cost: 2022 – $490,597; 2021 – $479,153)   $ 464,754     $ 452,482  
Non-controlled affiliated investments (amortized cost: 2022 – $74,951; 2021 – $74,082)     75,129       74,142  
Controlled affiliated investments (cost: 2022 – $58,142; 2021 – $52,130)     28,128       23,361  
Total Investments at Fair Value (cost: 2022 – $623,690; 2021 – $605,365)     568,011       549,985  
Cash and cash equivalents     20,524       28,919  
Restricted cash     63,094       39,421  
Interest receivable     3,119       5,514  
Receivable for unsettled trades     2,153       20,193  
Due from affiliates     592       507  
Other assets     3,365       3,762  
Total Assets   $ 660,858     $ 648,301  
LIABILITIES            
2018-2 Secured Notes (net of discount of: 2022 – $1,358; 2021 – $1,403)     162,504       162,460  
4.875{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} Notes Due 2026 (net of discount of: 2022 – $2,046; 2021 – $2,157; net of deferred financing costs of: 2022 – $977; 2021 – $951)     104,977       104,892  
Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of deferred financing costs of: 2022 – $640; 2021 – $732)     79,930       79,839  
Derivative liabilities (cost: 2021 – $31)     –       2,412  
Payable for unsettled trades     21,622       5,397  
Accounts payable, accrued expenses and other liabilities     5,101       4,819  
Accrued interest payable     3,325       2,020  
Due to affiliates     1,286       1,799  
Management and incentive fees payable     3,812       4,541  
Total Liabilities     382,557       368,179  
COMMITMENTS AND CONTINGENCIES            
NET ASSETS            
Common stock, par value $0.01 per share, 20,000,000 common shares authorized; 9,867,998 issued, and 9,676,705 outstanding at March 31, 2022, and 9,867,998 issued, and 9,699,695 outstanding at December 31, 2021     97       97  
Capital in excess of par value     733,327       733,095  
Total distributable (loss) earnings     (455,123 )     (453,070 )
Total Net Assets     278,301       280,122  
Total Liabilities and Stockholders’ Equity   $ 660,858     $ 648,301  
NET ASSET VALUE PER COMMON SHARE (4)   $ 28.76     $ 28.88  

(4) The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented.


PORTMAN RIDGE FINANCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)

    For the Three Months Ended March 31,
    2022     2021  
INVESTMENT INCOME            
Interest income:            
Non-controlled/non-affiliated investments   $ 12,667     $ 14,470  
Non-controlled affiliated investments     591       233  
Total interest income     13,258       14,703  
Payment-in-kind income:            
Non-controlled/non-affiliated investments     1,126       1,132  
Non-controlled affiliated investments     256       –  
Total payment-in-kind income     1,382       1,132  
Dividend income:            
Non-controlled affiliated investments     945       814  
Controlled affiliated investments     1,163       1,226  
Total dividend income     2,108       2,040  
Fees and other income     196       430  
Total investment income     16,944       18,305  
EXPENSES            
Management fees     2,135       1,793  
Performance-based incentive fees     1,678       2,094  
Interest and amortization of debt issuance costs     3,344       3,380  
Professional fees     845       1,494  
Administrative services expense     847       613  
Other general and administrative expenses     187       718  
Total expenses     9,036       10,092  
NET INVESTMENT INCOME     7,908       8,213  
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS            
Net realized gains (losses) from investment transactions:            
Non-controlled/non-affiliated investments     (3,670 )     (5,195 )
Non-controlled affiliated investments     212       109  
Derivatives     (2,095 )     –  
Net realized gain (loss) on investments     (5,553 )     (5,086 )
Net change in unrealized appreciation (depreciation) on:            
Non-controlled/non-affiliated investments     829       6,263  
Non-controlled affiliated investments     117       331  
Controlled affiliated investments     (1,245 )     625  
Derivatives     2,442       (474 )
Net unrealized gain (loss) on investments     2,143       6,745  
Tax (provision) benefit on realized and unrealized gains (losses) on investments     (440 )     –  
Net realized and unrealized appreciation (depreciation) on investments, net of taxes     (3,850 )     1,659  
Realized gains (losses) on extinguishments of debt     –       (1,835 )
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS   $ 4,058     $ 8,037  
Net Increase (Decrease) In Stockholders’ Equity Resulting from Operations per Common Share (4):            
Basic and Diluted:   $ 0.42     $ 1.07  
Net Investment Income Per Common Share (4):            
Basic and Diluted:   $ 0.82     $ 1.09  
Weighted Average Shares of Common Stock Outstanding—Basic and Diluted (1)     9,698,099       7,517,453  

(4) The Company completed a Reverse Stock Split of 10 to 1 effective August 26, 2021, the common shares and net asset value per common share have been adjusted retroactively to reflect the split for all periods presented.

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US businesses in China cut revenue forecasts, investment plans

US businesses in China cut revenue forecasts, investment plans

Truck motorists, these as the a single pictured in this article in Shanghai in late April, ordinarily require to present valid unfavorable virus assessments in order to transfer products between metropolitan areas in China. The American Chamber of Commerce in China reported associates have documented different implementation of Covid controls dependent on town and province.

Vcg | Visual China Group | Getty Images

BEIJING — More U.S. businesses in China are chopping earnings expectations and ideas for foreseeable future expenditure as Covid controls drag on, a new survey located.

Among late March and late April, the share of respondents reporting an affect from Covid restrictions rose by 4 share details to 58{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, according to an American Chamber of Commerce in China study introduced Monday.

While that’s not a massive improve, 4 or 5 proportion factors every thirty day period could be “really major” if Covid controls persist for another five months, Michael Hart, AmCham president, told CNBC in a cellphone job interview.

Requested what influence Covid limits will have if they previous for the up coming calendar year, additional than 70{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of respondents explained their profits or revenue would be slice.

The latest research, performed from April 29 to Might 5, included 121 providers with functions in China. That time time period bundled the latest Covid limits in the money city of Beijing.

Two, a few, four several years from now, I predict a large decline in investment decision in China because no new jobs are becoming teed up, mainly because persons can not come in and appear at room.

Michael Hart

president, AmCham China

The prior study was executed with AmCham Shanghai in late March, just as Shanghai’s initial system for a two-section lockdown had been starting. All those measures have lasted for much extended than the first 7 days.

In the final number of times, Beijing metropolis postponed the reopening of universities right until even further see, and requested all non-critical firms in a important business district to near temporarily or have their team work from property.

“There are extremely few aspects of the overall economy which seem to be to be performing,” a survey respondent stated in the report, which withheld the respondent’s title and location. “[While] COVID-19 constraints can be managed, what [will be increasingly difficult to] handle is deficiency in overall progress of the economy and what show up to be growing financial headwinds.”

Businesses lower China expenditure plans

The extended Covid controls — as mainland China tackles its worst virus outbreak because early 2020 — have even more discouraged U.S. firms from investing in the region, the AmCham study observed.

The percentage of respondents reporting reduced investments as a final result of the hottest outbreak and constraints rose to 26{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} versus 17{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} a thirty day period before.

These reporting a hold off in investments fell slightly to 26{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, compared to 29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the preceding study. The proportion who said it is really much too early to forecast or have not determined on the influence on investment options rose to 44{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the hottest study, up from 30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in the prior research.

Official figures show a continual raise in overseas direct expenditure from all countries into China, up by 31.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} calendar year-on-calendar year in the 1st quarter to $59.01 billion.

China’s Ministry of Commerce did not have a remark in advance of its frequent push convention on Thursday. When requested in late April about overseas businesses’ issues, the ministry said it would make all exertion to guarantee resumption of operate and generation.

Because China tightened border limits in 2020 to manage the transmission of Covid from tourists into the place, foreign organization companies have reported it is challenging to carry in workers. Which is due to the fact there’s a absence of global flights into China and quarantine periods on arrival of at least two weeks, if not for a longer period.

“If you want investment decision you have to allow for journey,” Hart stated, noting the effects will be felt in the extensive term.

“Two, 3, 4 a long time from now I forecast a enormous drop in expense in China because no new assignments are becoming teed up, since people today won’t be able to come in and seem at space,” he mentioned.

If Covid controls persist for the subsequent yr, 53{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of respondents to AmCham’s most recent study reported they would reduce expense in China.

Read much more about China from CNBC Pro

By industry, the tech and investigation and development enterprises claimed the maximum effects of Covid controls on their financial commitment options, with 53{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of people surveyed in the sector expecting delays or reductions.

On the other hand, client enterprises were the only types to report ideas to maximize financial commitment, albeit just 4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of customers in the sector. For the sector, 36{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} prepared to minimize investment, although 29{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} said they would delay investment as a end result of the most current outbreak.

The customer sector was also the only a single to report some raise in annually income projections inspite of the Covid affect, at 3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of respondents. Having said that, the majority of purchaser enterprises, or 69{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, stated they were cutting income anticipations for the 12 months.

Business hasn’t entirely resumed

Though Shanghai authorities have declared whitelists that allow just less than 2,000 firms to resume creation, AmCham’s newest survey discovered that amid respondents with Shanghai operations, 15{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} reported they had still to reopen.

That won’t mean the greater part are completely back again at work.

Hart said anecdotally, some organizations he spoke with very last 7 days in Shanghai were being working at 30{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} capability. A lot of suppliers stay shut, whilst shipping pieces and merchandise to prospects is nonetheless demanding, he explained.

A number of different cities throughout China have enacted some type of lockdown, and truck drivers normally require unique passes and repeated destructive virus assessments in get to transportation products.

Just based mostly on our very own companies’ practical experience in the U.S. and Europe and other markets, we have found that other nations around the world have taken a distinctive approach. We are just inquiring for a little bit additional of a balance.

Michael Hart

president, AmCham China

Component of the trouble is inconsistent implementation throughout provinces and metropolitan areas of what China phone calls its “dynamic zero-Covid” coverage, Hart mentioned.

At the nearby level, “governing administration officials are on the lookout for realistic methods for providers to fix their troubles and get back to work, for the reason that those people individuals are judged by economic efficiency,” Hart stated. “When we speak to federal government at [a] high amount, it is really not a concentration on the financial state. It’s a target on wellness and Covid reduction.”

“Just dependent on our have companies’ practical experience in the U.S. and Europe and other markets, we have viewed that other countries have taken a distinct system,” he explained. “We’re just asking for a bit much more of a equilibrium.”

Very last 7 days, Chinese President Xi Jinping led a conference that emphasised the country must “resolutely battle” versus all questioning of virus regulate guidelines. The conference also warned of financial outcomes if China failed to adhere to its dynamic zero-Covid policy.

In November, China’s Heart for Illness Handle and Avoidance revealed a analyze that warned that shifting to the “coexistence” method of other countries would likely end result in hundreds of countless numbers of daily circumstances — devastating the national medical process.

For Monday, mainland China documented 349 new Covid cases with indications and 3,077 with out signs or symptoms, mostly in Shanghai — which described six deaths for the day.

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White House says 20 internet companies will provide effectively free internet to millions of Americans

White House says 20 internet companies will provide effectively free internet to millions of Americans

The Biden administration announced Monday that 20 leading web support providers have agreed to offer you basic lower cost ideas that will be totally free for thousands and thousands of Individuals soon after a refund.

The 20 providers, together with AT&T (T), Comcast (CMCSA), and Verizon (VZ), address a lot more than 80{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the U.S. population. They will right away offer at least a person prepare that expenses no more than $30 a month and supplies obtain speeds of at the very least 100 mbps.

The White House states that 40{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the U.S. populace, about 48 million households, will be eligible to indicator up as a result of an present method termed the Inexpensive Connectivity Method (ACP). The plan is aimed at reduced cash flow People in america and presents individuals a low cost of up to $30/thirty day period on their world wide web invoice, meaning they’ll effectively get free support if they can get on the net with 1 of these collaborating providers.

AT&T CEO John Stankey mentioned his company’s new program “when merged with federal ACP gains, supplies up to 100 Mbps of absolutely free net service.”

“Internet for all demands the partnership of business and government, and we are delighted to be doing work with the Administration, Congress and FCC to make certain anyone has accessible, economical and sustainable broadband assistance,” he reported.

‘High velocity internet at house is no extended a luxury’

Monday’s information come largely many thanks to $65 billion set aside for higher pace internet in the Bipartisan Infrastructure law. That income has helped fund the ACP and is also becoming directed in direction of parallel endeavours to raise protection places and speeds.

“High velocity web at household is no lengthier a luxury: it can be a necessity for little ones to understand, employees to do their career, seniors and other folks to obtain well being treatment through telemedicine, and for all of us to stay connected in this electronic globe,” a senior administration official instructed reporters in previewing the announcement.

‘A historic opportunity’

Families are suitable for the ACP mostly based mostly on income degree. Any domestic earning a lot less than 200{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the Federal Poverty Amount — $55,500 for a family members of four in the continental U.S. — is eligible. Households can also qualify if they participate in particular authorities systems like Medicaid or Supplemental Security Cash flow.

“The Inexpensive Connectivity Program is a historic possibility to close the digital divide by empowering far more Us citizens to get on the web and join to our progressively digital earth, “ said David N. Watson, the CEO and president of Comcast.

The whole list of participating providers incorporates Allo Communications, AltaFiber, Altice United states of america, Astound, AT&T, Breezeline, Comcast, Comporium, Frontier, IdeaTek, Cox Communications, Jackson Power Authority, MediaCom, MLGC, Spectrum, Verizon, Vermont Telephone Corporation, Vexus Fiber, and Wow! Online, Cable, and Television set.

Verizon, as an illustration, will now offer you its current Fios company for $30/thirty day period to system participants. Other corporations, like Spectrum, say they will raise the speeds of an present $30/thirty day period prepare to access the 100 mbps regular set by the White Household, exactly where their infrastructure makes it possible for it.

Pushing a lot more companies to ‘make the very same commitments’

Notably lacking from Monday’s announcement are a lot of smaller sized and rural web company providers that would have a obstacle meeting the White House’s pricing or pace specifications.

“I consider that there are approximately 1,300 collaborating world-wide-web companies in the ACP ideal now and we would naturally enjoy for each and every and each a single of them to make the exact same commitments that these 20 businesses are undertaking,” said a senior administration formal.

WASHINGTON, DC - FEBRUARY 14: U.S. Vice President Kamala Harris delivers remarks on the Biden administration’s Affordable Connectivity Program at the South Court Auditorium at Eisenhower Executive Office Building on February 14, 2022 in Washington, DC. During the event Harris announced that 10 million households had enrolled in the program which helps families access high-speed, affordable internet. (Photo by Anna Moneymaker/Getty Images)

Vice President Kamala Harris discusses the Inexpensive Connectivity Method in February. (Anna Moneymaker/Getty Photos)

These businesses deal with 50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of the rural inhabitants. Those people Us residents are continue to suitable to sign up for the ACP, but they may well proceed to face slower speed or designs that are not entirely covered by the $30 refund.

So far, 11.5 million homes have signed up to get ACP gains. The system was initially established as a relief evaluate in the early days of the coronavirus pandemic, and Biden officials have moved to make it a long lasting as a way to lessen the electronic divide.

President Joe Biden and Vice President Kamala Harris will communicate at the White Property Monday together with net enterprise CEOs as the first portion of a multi-pronged work to drive signups. That energy includes a new web page, GetInternet.gov, and immediate outreach from federal companies like the Social Protection Administration as very well as states.

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

Go through the most recent fiscal and business information from Yahoo Finance

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SEC Questions Companies About Financial Impact of Russian War on Ukraine

SEC Questions Companies About Financial Impact of Russian War on Ukraine

The Securities and Trade Commission has begun questioning U.S. general public companies on how Russia’s war on Ukraine has impacted their funds.

The regulator on Tuesday urged companies to give thorough disclosure on their publicity to Russia, Belarus and Ukraine, from business enterprise associations to supply-chain disruptions to their investments.

The SEC posted a listing of requests that its workers has been sending to corporate executives, an hard work to compel them to supply additional facts to their investors. The agency’s corporate-finance division routinely sends comment letters to general public companies to inquire about their disclosures or accounting procedures tied to filings these types of as quarterly or once-a-year reports.

The requests center on the influence on companies’ finances stemming from sanctions, import or export bans, and reactions from buyers or consumers to their steps, these as, for case in point, continuing to spend taxes to the Russian governing administration.

Inquiries could also cover the part of corporate boards in overseeing war-connected dangers, heightened risk of cyberattacks or the nature of adjustments organizations have created to expenses—for illustration, for payment, undesirable financial debt or others tied to functions in the applicable nations. Firms commonly disclose their board’s purpose in governance and risk oversight in proxy statements but not in their yearly or quarterly filings. The SEC didn’t expose which companies have acquired the letters.

Virtually 1,000 international enterprises have curtailed operations in Russia, some of them closing down completely, considering that the invasion of Ukraine commenced in late February, according to the Yale College of Administration. Much more than 200 businesses from close to the world proceed to function in the region, the knowledge confirmed.

Firms this kind of as

BP

PLC and

General Electric Co.

not too long ago booked impairment rates of $25.5 billion and $200 million, respectively, to account for losses from pulling again from Russia.

Only a handful of the letters have been manufactured general public so far. In some scenarios, the providers ended up requested to revise their disclosure in fiscal reporting in response to the SEC’s remarks. The regulator declined to comment.

In letters introduced last month, the SEC requested

United Parcel Provider Inc.

for much more element on the war’s adverse influence on the supply giant’s business enterprise, which it described in its once-a-year report for the 12 months finished Dec. 31. Atlanta-primarily based UPS generates significantly less than 1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of its annual revenue from Russia, Belarus or Ukraine, an quantity it doesn’t consider significant, Chief Fiscal Officer

Brian Newman

said in a March 15 letter in reaction to the SEC.

UPS in February explained it temporarily suspended all shipping solutions to, from and within Ukraine, Belarus and Russia. The firm stated its halt of overflights around Russia, which was enacted in March, poses no key affect on its fees. UPS will involve suitable disclosure in its public filings if it expects a substantial impact from the invasion, Mr. Newman reported. The organization did not reply to a ask for for comment.

In a different established of letters the SEC made public last month, the regulator sought clarity from

ESAB Corp.

The industrial-technology company disclosed in March that its enterprise in Russia very last 12 months comprised 7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} of its full revenue. The SEC requested whether that intended the North Bethesda, Md.-dependent organization derived that portion of its earnings from product sales in the state. ESAB revised its disclosure to clarify that the figure represented sales there, a lawyer for ESAB explained to the SEC on March 17.

ESAB, which declined to remark even further for this tale, on April 25 explained it was transitioning its operations out of Russia.

The sample inquiries abide by a very similar shift by the SEC last drop asking community businesses to give far more facts to traders about how local weather alter could possibly have an impact on their fiscal earnings or enterprise operations. Considering the fact that then, the SEC has sent about 35 U.S.-mentioned companies a whole of 70 letters, according to investigation business Audit Analytics. The regulator previous 12 months sent a complete of 1,330 letters to U.S.-shown businesses, down 19.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from the 12 months earlier, Audit Analytics claimed.

The SEC in latest years has talked over Russia-related dangers with only a couple of businesses, such as Australian software company

Atlassian Corp.

and Russian e-commerce platform Ozon Holdings PLC.

The Ukrainian American Bar Association, a group of U.S. lawyers, judges and legislation pupils of Ukrainian descent, final thirty day period filed a petition to the SEC, requesting that the regulator established a rule necessitating corporations to disclose their organization dealings in and with Russia and Belarus.

Finance executives will want to examine to what extent the unique conditions outlined in the SEC’s sample letter implement to them, claimed David Lynn, associate at law business Morrison Foerster LLP and former main counsel at the SEC’s corporate-finance division.

“You do not want to be too concentrated on seeking to anticipate the SEC’s feedback and more concentrated broadly on how this circumstance impacted the firm,” Mr. Lynn said.

Create to Mark Maurer at Mark.Maurer@wsj.com

Copyright ©2022 Dow Jones & Enterprise, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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CFPB Invokes Dormant Dodd-Frank Authority to Regulate Nonbank Financial Companies

CFPB Invokes Dormant Dodd-Frank Authority to Regulate Nonbank Financial Companies

May 5, 2022

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On April 25, 2022, the Consumer Financial Protection Bureau announced that it will begin relying upon a “largely unused legal provision” of the Dodd-Frank Act to supervise nonbank financial companies that purportedly pose risks to consumers.  To facilitate that process, the CFPB simultaneously promulgated a procedural rule that authorizes it to publish its decisions about whether certain nonbank entities present such a risk.  The CFPB has stated that it intends for these decisions to provide nonbank entities with guidance about the circumstances in which they may be subject to regulation.  Left unstated is the reality that the threat to publicly designate an entity as posing risks to consumers will provide the CFPB with additional leverage over such entities.

The CFPB’s announcement marks a significant expansion of its supervisory reach.  The CFPB said that it intends to “conduct examinations” of “fintech” companies and “to hold nonbanks to the same standards that banks are held to.”  And it is expected that the CFPB will assert the same authority over crypto firms.  The CFPB’s announcement comes at a time of increasingly intense competition among regulators to assert jurisdiction over fintech and digital assets firms.  Gibson Dunn represents many clients at the forefront of crypto and fintech innovation, and has deep experience challenging over-extension of agencies’ regulatory authority, including by financial regulators.  We stand ready to help guide industry players as the CFPB moves forward with its ambitious plans.

I. The CFPB’s Authority to Regulate Nonbank Entities

Historically, only banks and credit unions were subject to federal financial supervision.  That changed when Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).

Under Dodd-Frank, the CFPB has supervisory authority over several categories of nonbank entities, including entities that provide mortgage, private student loan, or payday loan services.  12 U.S.C. § 5514(a)(1)(A), (D)–(E).  In addition, and most relevant here, the CFPB may regulate nonbank entities when it “has reasonable cause to determine”—after providing notice and an opportunity to respond—that the entity “poses risks to consumers” regarding the provision of consumer financial products or services.  Id. § 5514(a)(1)(C).

The CFPB issued a procedural rule in 2013 delineating the risk-determination process, but it has never before used this authority to supervise a nonbank.  As the CFPB’s April 25, 2022 announcement explains, however, that is about to change.  In the announcement, the CFPB said that it will begin exercising its “dormant authority” under Dodd-Frank to supervise nonbank entities—including “fintech” firms—that it has determined pose a risk to consumers.

The Dodd-Frank Act and the CFPB’s implementing regulations detail the risk-determination process and the consequences of being subject to regulation.

  • The Risk-Determination Process. The CFPB promulgated detailed procedures for the process it uses to determine whether nonbank entities are a risk to consumers, and thus subject to regulation under Dodd-Frank.  See 12 C.F.R. §§ 1091.100–.115.  Those procedures give the CFPB discretion to initiate the risk-determination process through issuing a “Notice of Reasonable Cause,” id. § 1091.102, or through bringing charges in an adjudicatory proceeding, id. § 1091.111.  Whichever path the CFPB chooses, it must provide notice of the basis for the apparent risk and an opportunity for the nonbank entity to respond.  The CFPB has stated that it may base its risk determinations on “complaints collected by the CFPB, or on information from other sources, such as judicial opinions and administrative decisions,” as well as “whistleblower complaints, state partners, federal partners, or news reports.”  After considering the available evidence and any responses from the nonbank entity, the Director will decide whether it has “reasonable cause” to find a risk to consumers.  The Director’s decision to subject an entity to regulation under Dodd-Frank is subject to review under the Administrative Procedure Act.
  • Regulation under Dodd-Frank. If the CFPB determines that a nonbank entity is subject to regulation based on a risk determination, then it faces the same level of regulation as banks.  Among other things, the CFPB can conduct examinations to ensure compliance with consumer financial laws, 12 U.S.C. § 5514(b)(1), require entities to comply with recordkeeping requirements, id. § 5514(b)(7), and is generally vested with exclusive enforcement authority over federal consumer financial laws, id. § 5514(c).  Notwithstanding the formal processes for making risk determinations, entities may also voluntarily consent to regulation under Dodd-Frank.  12 C.F.R. §§ 1091.110(a), 1091.111(a).
  • Petition for Termination. In the event the CFPB determines after the Issuance of a Notice of Reasonable Cause that a nonbank entity poses a risk to consumers and is thus subject to regulation under Dodd-Frank, that entity may file a petition before the Director to terminate the decision and escape regulation under the Act.  12 C.F.R. § 1091.113(a).  That petition may be filed “no sooner than two years after” the decision, and only one petition may be filed per year.  Id.  The Director’s decision on a petition qualifies as “final agency action” that may be subject to review under the Administrative Procedure Act.  Id. § 1091.113(e)(3).

II. New Rule Allowing Publication of Risk-Determination Decisions

Accompanying its announcement to begin supervising fintech nonbanks, the CFPB issued a procedural rule amending the risk-determinations procedures.  Supervisory Authority Over Certain Nonbank Covered Persons Based on Risk Determination; Public Release of Decisions and Orders, 87 Fed. Reg. 25397 (proposed Apr. 29, 2022).

As a general matter, materials submitted in connection with a risk determination are considered confidential.  12 C.F.R. § 1091.115(c).  But with this new rule, which took effect on April 29, 2022, the CFPB may in the Director’s discretion publish decisions and orders made during the risk-determination process on the CFPB’s website.  According to the CFPB, this is designed to “increase the transparency of the risk-determination process” and give nonbank entities guidance about how the CFPB will enforce the Dodd-Frank Act moving forward.  Of course, the measure also affords the CFPB an opportunity to make headlines regarding its efforts to bring large, innovative, and/or well-known entities under its supervisory control.  The rule gives the nonbank entity subject to the order or decision an opportunity to file a submission with the CFPB regarding publication of the CFPB’s determination.  The Director also decides whether to publish on the CFPB’s website the decision about whether the risk determination will be publicly released.

The CFPB has requested public comments on the rule, which must be received by May 31, 2022.  Interested parties should consider commenting on the proposal to express any concerns, propose improvements, and to preserve their ability to bring a legal challenge to the rule.  For regulated entities, a challenge to the rule may be preferable to raising objections only after the CFPB has identified the entity by name in a published risk determination.

III. Implications for Fintech and Crypto Companies

The CFPB’s announcement of its intent to begin supervising fintech firms—which is believed to include crypto firms as well—represents a muscular expansion of the agency’s regulatory purview.  It is yet another aggressive action in the young tenure of Director Rohit Chopra—one that has been controversial and generally perceived as hostile to industry.  The consequences for fintech and crypto firms could be significant.  Although much will depend on the vigor with which the CFPB pursues its rediscovered supervisory authority, the CFPB stated that it intends to “conduct examinations” of fintech companies and to hold them to “the same standards that banks are held to.”  Further, the CFPB’s new procedural rule allows the agency to publicize its findings about the risks that a fintech or crypto company poses to consumers before the agency completes an examination of the company, contrary to the confidentiality principles encouraging full and frank communications between an entity and its regulator, which principles lie at the heart of the supervisory process.

The CFPB’s new assertion of jurisdiction is in keeping with the surge of interest among federal regulators in the fintech and crypto industries over the past year.  The SEC, CFTC, FinCEN, Treasury, and other agencies have been jockeying for position to regulate this fast-growing and innovative space.  Absent legislation from Congress clearly defining regulatory roles within the industry, that jockeying is likely to continue.  In March 2022, President Biden issued an executive order directing numerous agencies to evaluate the risks and benefits of digital assets.  The reports resulting from that executive order may only heighten scrutiny of the crypto industry and increase the number of regulators asserting jurisdiction over it.

*    *    *

As the CFPB decides which entities it will seek to regulate under Dodd-Frank, companies can take steps now to begin assessing their compliance with the laws administered by the CFPB.  Gibson Dunn represents many clients at the forefront of fintech, crypto, and blockchain innovation and stands ready to help guide industry players through this new era of CFPB regulation and the growing patchwork of federal regulation.  The Gibson Dunn team has the expertise to provide guidance and develop innovative arguments challenging the CFPB’s authority.  E.g., PHH Corp. v. CFPB, 839 F.3d 1 (D.C. Cir. 2016) (holding that the CFPB was unconstitutionally structured in violation of Article II and that the CFPB violated the APA), on reh’g en banc, 881 F.3d 75, 83 (D.C. Cir. 2018) (en banc) (vacating a $109 million penalty because the CFPB misinterpreted the statute and violated due process by retroactively applying its new interpretation); Bus. Roundtable v. SEC, 647 F.3d 1144 (D.C. Cir. 2011) (defeat of SEC “proxy access” rule).

Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. If you wish to discuss any of the matters set out above, please contact Gibson Dunn’s Crypto Taskforce (cryptotaskforce@gibsondunn.com), or any member of its Financial Institutions, Global Financial Regulatory, Privacy, Cybersecurity and Data Innovation, Public Policy, or Administrative Law teams, including the following authors:

Ryan T. Bergsieker – Partner, Privacy, Cybersecurity & Data Innovation Group, Denver (+1 303-298-5774, rbergsieker@gibsondunn.com)

Ashlie Beringer – Co-Chair, Privacy, Cybersecurity & Data Innovation Group, Palo Alto (+1 650-849-5327, aberinger@gibsondunn.com)

Matthew L. Biben – Co-Chair, Financial Institutions Group, New York (+1 212-351-6300, mbiben@gibsondunn.com)

Michael D. Bopp – Co-Chair, Public Policy Group, Washington, D.C. (+1 202-955-8256, mbopp@gibsondunn.com)

Stephanie L. Brooker – Co-Chair, Financial Institutions Group and White Collar Defense & Investigations Group, Washington, D.C. (+1 202-887-3502, sbrooker@gibsondunn.com)

M. Kendall Day – Co-Chair, Financial Institutions Group, Washington, D.C. (+1 202-955-8220, kday@gibsondunn.com)

Roscoe Jones, Jr. – Co-Chair, Public Policy Group, Washington, D.C. (+1 202-887-3530, rjones@gibsondunn.com)

Eugene Scalia – Co-Chair, Administrative Law & Regulatory Practice Group, Washington, D.C. (+1 202-955-8543, escalia@gibsondunn.com)

Helgi C. Walker – Co-Chair, Administrative Law & Regulatory Practice Group, Washington, D.C. (+1 202-887-3599, hwalker@gibsondunn.com)

Associates Nick Harper and Philip Hammersley also contributed to this client alert.

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