Promontory Financial Agrees to Pay $15M, Drops Threat of Litigation

The New York Times reported yesterday that Promontory Financial Group has agreed to a settlement with the New York Department of Financial Services. The firm will pay a $15M penalty and will abstain from certain consulting projects in New York for six months.

Promontory is a consulting firm that primarily advises multinational bank clients on regulatory matters. This agreement is the resolution of a two year investigation into the company’s alleged failure to exhibit independence when reviewing bank practices.

Earlier this month we reported that Promontory had effectively been banned indefinitely from doing business with New York banks, and was threatening to sue the regulator.

On a related note, we also reported in June that Promontory announced the acquisition of FS Advisory, the consumer finance consultancy of Fenway Summer LLC. This is the firm that was started by Raj Date, who was instrumental in standing up the Consumer Financial Protection Bureau and was its first Deputy Director.

insideARM Perspective

Stephanie Eidelman

While this is not a debt collection matter, it is an interesting example of a regulator going after another category of firm – this time a small (when compared with its clients) vendor.

The fact that this particular firm is stocked with former regulators is intriguing. Perhaps this action helps to counter the claims that companies like this garner special treatment. On the other hand, maybe this is a contributing reason the case was pursued – to demonstrate that former regulators are not getting special treatment or access.