Beginning as early as March 2020, there have been several fraudulent filings made with the Colorado Secretary of State (“SOS”) involving former and current bank entities. Fraudulent filings have been made to change a bank’s:
- Form of entity,
- Registered agent,
- Registered address, and
- Jurisdiction of formation.
Although approval by the Colorado Division of Banking (“CDOB”) is required for any filing of corporate documents with the SOS which include the words “bank,” “trust,” “trust company” or any derivation thereof, such filings may be made with the SOS without obtaining prior approval of the CDOB. A person making an online filing with the SOS does affirm that he or she is acting in good faith to make the filing and provides a name and address of the filer. However, it is a simple matter to provide a false name for the filer and complete the filing, which is automatically accepted by the SOS.
Depending upon the type of filing made against a bank’s SOS record, correction of the fraud can take time and money to correct or undo.
Actions to Take Now
All banks and bank holding companies should insure that their entity records at the SOS have been locked for secure business filings. This does not occur automatically but must be elected for each entity. When you have accessed your bank listing on the SOS website, you will select “set up secure business filing.” The SOS will mail a PIN to the bank’s principal place of business. The PIN can then be used to lock your bank’s file to require a password for all SOS filings. A bank can grant access to secure business filings to more than one person.
In addition, each bank should select an officer to subscribe to email notifications for all SOS filings made on your bank’s record. On the SOS website for your bank listing, you will select “subscribe to email notification.” Regular monitoring of your bank’s corporate records with the SOS can help to quickly detect and correct any fraudulent activity.
Karen Witt is a partner and member of the Lewis Roca Rothgerber Christie Business Transactions group and co-chairs the firm’s Banking Industry group. Her areas of practice focus on securities, mergers and acquisitions, regulatory compliance, corporate governance, corporate finance transactions and legal opinions. For more information, please contact Karen Witt at email@example.com.