USA Law and Practice Contributed by: Margo H. K. Tank, Michael Fluhr, Deborah Meshulam, Kristin Boggiano, David Stier, Liz S. M. Caires, Adam Dubin, Emily Honsa Hicks, Meghan Carey, Kathleen Birrane and Eric Hall, DLA Piper LLP
3. Robo-Advisers 3.1 Requirement for Different Business Models Robo-advisers provide asset management ser - vices to their clients through online algorithmic- based programmes, and are typically investment advisers registered with the SEC, subject to SEC oversight, and must comply with the Advisers Act. Depending on the types of services they provide, robo-advisers also may be subject to other regulatory regimes. 3.2 Legacy Players’ Implementation of Solutions Introduced by Robo-Advisers Many major US banks, broker-dealers and investment advisory firms have implemented a robo-adviser platform. Within the US, the robo- adviser industry is anticipated to experience high growth due to digitalisation in the financial sector. 3.3 Issues Relating to Best Execution of Customer Trades The Advisers Act establishes a federal fiduciary standard for all investment advisers, including robo-advisers. When a robo-adviser selects broker-dealers and executes customer transac - tions, the robo-adviser is obligated to seek “best execution” of customer transactions.
Loans to individuals for consumer purposes (ie, family, household, or personal use) are highly reg - ulated. At the US federal level, there are a variety of consumer protection laws (eg, TILA, ESIGN, FCRA, EFTA, and unfair, deceptive, abusive acts and practices (UDAAP)) with which online lend - ers originating consumer loans will likely need to comply, depending on the specific features of the product. More regulations are triggered under federal law if the consumer product being offered is secured by real estate (ie, residential mortgages). At the state level, lenders offering consumer loans must be licensed in almost all states. Small business and commercial loans are often exempt from many federal laws and regula - tions, and state licensing, usury, and disclosure requirements, depending on the features of the product. Only nine states require lenders to provide specific disclosures to commercial loan recipients. Commercial lenders are subject to licensure in less than half the states, often only where the interest rate or principal amount devi - Underwriting processes in the US vary by indus - try but generally assess credit risk, income, col - lateral, and the borrower’s ability to repay. Banks and traditional lenders follow regulatory guide - lines set by agencies such as the OCC, FDIC, and CFPB, while private lenders and fintechs often use proprietary models with fewer regula - tory constraints. Mortgage and small business loans adhere to strict federal rules, including the Dodd-Frank Act and Small Business Administra - tion (SBA) requirements, whereas corporate and commercial lending relies on financial metrics and risk-based assessments. ates from specified thresholds. 4.2 Underwriting Processes
4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities
There are significant differences in US regulation of loans made to consumers and loans made to businesses.
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