Image by Mark Moz

Jeb Hensarling, chairman of the U.S. House Financial Services Committee, outlined proposed legislation to clear away many rules bankers say have hobbled investment and economic growth in a staff memo reported by Reuters.

Hensarling’s plan would roll back Wall Street rules and consumer protections conceived after the 2008 financial crisis, a step that will largely define the financial deregulation debate in the Trump era.

“Under Hensarling’s plan, the largest U.S. banks would face less oversight — though not as little as they had been hoping for – while startups would have easier access to investors,” writes reporter Patrick Rucker.

Read the Reuters article.

A federal jury awarded the former general counsel of BioRad Laboratories $8 million in back pay and damages — which will increase to $11 million — for whistleblower retaliation involving potential bribery in China, according to a Courthouse News article.

Sanford “Sandy” Wadler won $2.96 million for economic losses and $5 million in punitive damages. Because the Dodd-Frank Act allows double back pay damages for whistleblower retaliation, the back pay award will increase to $5.92 million, bringing the total to nearly $11 million, explains reporter Nicholas Iovino.

Wadler sued Hercules, California-based BioRad Laboratories and its CEO Norman Schwartz in May 2015. He alleged he was fired in June 2013 for reporting potential bribery in China, a violation of the Foreign Corrupt Practices Act.

David A. Nenni and Jessica L. Sussman of Jackson Lewis also wrote about the verdict in the firm’s Corporate Compliance and White Collar Advisor blog:

This case implicates a number of key issues confronting companies and their in-house legal teams, including:  (1) protections and scope of the attorney-client privilege; (2) what constitutes protected activity from an in-house attorney or compliance officer; (3) the importance of consistent and timely performance critiques; and (4) preparing adverse employment decisions to be scrutinized by a judge, jury, or arbitrator.  The case also highlights the existing split among federal courts regarding what constitutes a “whistleblower” under the DFA.

Read the Courthouse News article.

Read the Jackson Lewis blog item.

Join Our LinkedIn Group

A federal judge plans to appoint a special master to investigate whether prominent law firms in Boston and other cities padded their legal bills by millions in a class-action lawsuit against State Street Bank, saying the lawyers may have to pay up to $2 million, in advance, to fund the investigation, reports The Boston Globe.

U.S. District Court Judge Mark L. Wolf said he wants a review legal bills submitted by Thornton Law Firm of Boston, Labaton Sucharow of New York, and seven other firms to justify the fees they received from the case last year, writes Andrea Estes.

A Boston Globe review of the records submitted to justify the legal bills showed that three law firms submitted bills for the same lawyers, and often with different hourly rates. And the hourly rates claimed in the firms’ filings, which ranged from $335 to $500 an hour, were often 10 times more than what the lawyers normally earned.

Read the Boston Globe article.

Brendan Delany has joined Blank Rome LLP as a partner in the Finance, Restructuring and Bankruptcy group. He is based in the Firm’s Washington, D.C., office and comes to Blank Rome from Cadwalader, Wickersham & Taft LLP.

In a release, the firm said Delany focuses his practice on the financial services, energy and commodities, and real estate sectors, counseling clients in transactions related to energy finance, real estate finance, and mergers and acquisitions. He represents borrowers, energy trading companies, hedge funds, hedge providers, REITs, developers, and various types of financial institutions in connection with domestic and international financing and trading transactions pertaining to a wide variety of assets, including commercial real estate, metals, energy, and agricultural commodities, power plants, and other assets.

The release continues:

“We are excited to welcome Brendan to Blank Rome,” said Alan J. Hoffman, the Firm’s Chairman and Managing Partner. “Brendan is dedicated to client service and has become well-known as a trusted adviser who goes above and beyond for his clients. His wide breadth of transactional experience will be a great addition to our D.C. office and will add significant depth to our finance, energy, and real estate practices.”

Delany assists clients with cross-border repurchase agreement transactions, intermediation agreements, inventory financing, asset-based loans, secured power plant financings, and other commercial real estate financings. He represents clients in domestic and non-U.S. jurisdictions, including Asia, South and Central America, Europe, and Australia. Mr. Delany has represented privately held and publicly traded entities in a broad range of corporate matters and energy transactions, including acquisitions, dispositions, joint ventures, and restructurings. He has represented renewable energy facility developers, REITs, energy companies, hospital owners and operators, hospital providers, shopping center developers, government agencies, and financial institutions involved in financing arrangements related to the acquisition, disposition, financing, development, management, and leasing of real property.

“In addition to bolstering our energy and finance practices, Brendan’s extensive real estate finance experience will further enhance our well-established real estate group,” said Lawrence F. Flick II, chair of Blank Rome’s financial services industry team. “Our real estate attorneys handle all facets of real estate law, including real estate financing and other related transactions that range from middle-market, single property secured loans to large-scale, multiple property/multi-state credit facilities, and Brendan will be an excellent asset to the team and our clients.”

“I’m thrilled to join Blank Rome, primarily for the vast platform the Firm has to offer,” said Delany. “Blank Rome has engaged in some very exciting growth and expansion in recent years in areas that will be of great benefit to my clients and my practice, including real estate, energy, and financial services. Additionally, I have known Jason Eig, James Kelly, and other members of Blank Rome for many years, and I look forward to working with them again.”

Aside from his legal work, Delany is a member of the board of trustees of the Connelly Foundation in Philadelphia, and currently serves as a member of the board of directors of the Franklin Lyle Stroud, M.D. Foundation for Learning Disabilities and as an adviser to the board of directors of the Washington Jesuit Academy.

Delany received his J.D. from Catholic University’s Columbus School of Law where he was a published member of the Catholic University Law Review. He received his B.S.F.S. from Georgetown University’s Edmund A. Walsh School of Foreign Service.

Last month, the firm added two energy partners in Pittsburgh and last year welcomed Partner Sophia Lee in Philadelphia, as well as former U.S. Secretary of Energy Spencer Abraham and former Vice-Chairman of the International Energy Agency Joseph P. McMonigle in Washington, D.C., as principals in Blank Rome Government Relations LLC.

Join Our LinkedIn Group

American Banker asks the question of what will be the immediate impact of President Trump’s executive order  calling for a review of financial regulatory policy, especially the 2010 Dodd-Frank Act.

The magazine’s conclusion is that the impact likely will be small in the short term.

In the article, Joe Adler writes that the order was framed as “core principles” rather than any immediate policy change.

“The president has very little direct authority to change Dodd-Frank, repeal the fiduciary duty rule or revamp Fannie Mae and Freddie Mac. As a result, his orders will urge other parts of the government to make changes,” wrote Jaret Seiberg, an analyst at Cowen Group. “With the possible exception of the fiduciary duty rule, actual changes for the banks are unlikely to occur quickly.”

As for the long-term impact, Adler writes that a complete unwind of the 2010 law is unlikely in the current political environment in Washington.

Read the American Banker article.

Join Our LinkedIn Group

U.S. President Donald Trump was set on Friday to fire the opening salvo in his campaign to scale back major regulations that resulted from the financial crisis, directing a review of the Dodd-Frank Act and putting the brakes on a retirement advice rule, Reuters is reporting.

“The executive order Trump will sign on the 2010 Dodd-Frank law on Wall Street reform will be a first step towards rolling back the regulations that Trump sees as hurting the economy, but without rewriting the legislation, which can be done only through Congress,” write Ayesha Rascoe and Sarah N. Lynch. One prominent measure is the ‘Volcker rule’ that greatly restricts how banks can make bets with their own money.”

At a recent meeting with business owners, Trump described the law as “a disaster,” the reporters write.

Read the Reuters article.

Join Our LinkedIn Group

Greensfelder, Hemker & Gale, P.C., announces that attorney Andrew M. Hartnett has joined the firm as an officer with the Securities & Financial Services industry group. Based in the firm’s St. Louis office, Hartnett most recently served as Commissioner of Securities for former Missouri Secretary of State Jason Kander.

“We welcome Andrew to Greensfelder and to our growing team of Securities and Financial Services attorneys,” said Greensfelder Chief Executive Officer Timothy R. Thornton. “In addition to his extensive experience in data security matters, Andrew brings a regulator’s perspective on important industry challenges and issues that impact our clients in Missouri and throughout the nation.”

Inn a news release, the firm reported:

As Commissioner of Securities from 2013 to 2016, Hartnett directed the Missouri Securities Division and heard cases filed by the Enforcement Section of the Division. In this role, he spearheaded the drafting and passage of the Missouri Senior Savings Protection Act – one of the first statutes of its kind in the country created to prevent financial exploitation of senior citizens. In addition to his policy work in Missouri, Hartnett helped formulate policy nationwide through his work at the North American Securities Administrators Association (NASAA), particularly on cybersecurity, leading the team that created the cybersecurity program now used by most state regulators. He chaired the Broker-Dealer Section and the Enforcement Section for NASAA as well as committees focused on cybersecurity, technology, and federal legislation. Hartnett also has spoken at conferences and other events nationwide on topics including state securities regulations, cybersecurity, and protection for senior investors.

“Andrew’s securities knowledge and experience with both the Missouri Securities Division and NASAA will be great assets to our firm,” said Christopher A. Pickett, an officer and leader of Greensfelder’s Securities & Financial Services industry group. “His contributions will be instrumental to helping our clients including financial institutions navigate complex regulatory and compliance issues, as well as manage critical business issues and litigation.”

Hartnett said, “I look forward to helping to grow Greensfelder’s Securities and Financial Services practice while also enhancing services to the firm’s existing clients in the sector. I believe the experience and knowledge I have gained as Missouri’s Commissioner of Securities as well as my work with regulators in other states will be beneficial to addressing clients’ regulatory and compliance issues to help them focus on their businesses.”

Prior to his time as Commissioner of Securities, Hartnett served as Chief of Staff to then-Missouri Attorney General Chris Koster and as an Assistant Attorney General in the Consumer Protection Division, handling all aspects of consumer protection, antitrust and securities investigations and litigation. He began his career in private practice in St. Louis.

Hartnett earned his law degree (cum laude) from Saint Louis University School of Law, his Master of Arts from New York University and his Bachelor of Arts (summa cum laude) from Catholic University of America.

Join Our LinkedIn Group

The Association of Corporate Counsel, the world’s largest community of in-house counsel, will stage the ACC Mid-Year Meeting in New York on April 2-4, 2017.

The event will be at the New York Marriott Marquis Hotel. General Counsel News readers may receive a $200 discount on the registration fee if they register by Feb. 20.

An ACC release says the meeting will help participants prepare for changes in the regulatory landscape with sessions on:

• The impact of evolving regulations and enforcement trends on contracts
• Current and most controversial changes in employment law
• Reducing financial sector regulatory risk

Other activities will include:

• Engage directly with expert faculty
• Connect with your peers through multiple networking opportunities
• Have the opportunity to earn 12-14 CLE/CPD (1 credit Ethics eligible), 14 CCB CEU credits, and 3-4 CPE credits

Register for the meeting.

Thomson Reuters Practical Law developed a legal update containing the full transcript of the keynote address given by Mary Jo White, former Chair of the Securities and Exchange Commssion, at Northwestern University Pritzker School of Law’s 44th Annual Securities Regulation Institute.

She began her address with a brief look back over her tenure at the SEC, the agency’s effort to evolve with market technology, evolution with new financial products, evolving with new paths to capital formation, pursuingn strong enforcement and examinations, and a look at the SEC going forward.

Read the transcript.

Join Our LinkedIn Group

Online lending companies are seeking to exert more influence in Washington under President-elect Donald Trump and a Republican-controlled Congress, reports Bloomberg.

Lenders are joining lobbying groups working toward laws that will make it easier for them to attract new borrowers and investors as they look for ways to grow and limit future regulatory scrutiny, writes Elizabeth Dexheimer.

Among the groups she cited are the Marketplace Lending Association, consumer lenders Avant Inc. and Affirm Inc. ,as well as student lender CommonBond Inc., backed by former Citigroup Inc. Chief Executive Officer Vikram Pandit. Founding members include LendingClub Inc. and Prosper Marketplace Inc., according to the report.

Read the Bloomberg article.

Join Our LinkedIn Group

Two of the nation’s largest credit reporting bureaus, TransUnion and Equifax, will together pay more than $23 million in fines and refunds to settle charges from a federal consumer watchdog that they misled consumers about the pricing and value of credit products, according to a Washington Post report.

The Consumer Financial Protection Bureau said the companies deceived consumers by suggesting that the credit scores they provided were the same scores used by financial firms to make lending decisions when in fact, the scores “were not typically used by lenders,” reports Jonnelle Marte.

Some of the companies’ products offered as free, or as costing $1, in fact incurred monthly charges adding up to almost $200 a year, the CFPB claimed.

Read the Washington Post article.

Join Our LinkedIn Group

A federal judge whacked $10 million from the fee request of a class-action firm that negotiated a $335 million settlement of mortgage-backed securities claims against Bank of America, saying it was based on the work of short-term “associates” who appeared to function as contract attorneys, reports Forbes.

In his order, U.S. District Judge William Pauley awarded $41.3 million in fees and $1.4 million in expenses for their work on the case, or about 12% of the sum they negotiated for their clients.

The 26 Barrack associates, 16 of whom were labeled “temporary associates hired exclusively on the BOA case, “represented 40% of the billable hours and $10.8 million in fees at $362.50 an hour — well above the prevailing rate for contract attorneys of less than $50 an hour,” writes Forbes’ Daniel Fisher.

Read the Forbes article.

Join Our LinkedIn Group

Jeb Hensarling
Image by Gage Skidmore

Dismantling President Obama’s financial reform law is not a priority for President-elect Trump’s first 100 days, the author of GOP legislation to undo the law said Thursday, but it is a task for Trump’s first year, reports The Washington Examiner.

Jeb Hensarling, the chairman of the House Financial Services Committee, said he’s discussed ditching the law with Trump, writes Joseph Lawler.

“The president-elect committed to dismantle Dodd-Frank. It’s going to happen in the first year.”

Hensarling has said that some of the law could be dismantled through executive action and more could be undone using budget reconciliation.

Read the Examiner article.

Join Our LinkedIn Group

If President Elect Trump follows through on his promise of big tax cuts, it would be a good idea to defer income into next year if you can, advises Robert W. Wood in an article for Forbes.

“Conversely, Trump’s plans make paying expenses in 2016 especially attractive if you can deduct them. The deductions may be worth a lot less in 2017. One good example is legal fees. No one likes paying legal fees, but tax deductions can make them a lot less painful. If you pay a 40% tax rate, $10,000 in deductible legal fees costs you only $6,000. But not every legal bill is tax deductible,” Wood writes.

He warns that personal legal fees, such as for a divorce, can’t be deducted. But the best kind of legal fees are business expenses. Wood also discusses how to handle income from litigation, deductions, and what to expect for future income tax brackets.

Read the Forbes article.

Join Our LinkedIn Group

Double-digit investment returns for little-known New York hedge fund Platinum Partners turned out to be too good to be true, according to federal prosecutors.

The New York Times reports that federal agents arrested Mark Nordlicht, a founder and the chief investment officer of Platinum, and six others on charges related to an alleged $1 billion fraud. It is one of the largest such fraud cases since Bernard L. Madoff’s investment firm unraveled in 2008.

“David Levy, the firm’s co-chief investment officer, was also among those arrested in the morning by agents in Texas, Manhattan and New Rochelle, a suburb of New York City,” writes reporter Alexandra Stevenson. “The men were charged with securities fraud and investment adviser fraud, according to an unsealed indictment filed in Federal District Court in Brooklyn. The Securities and Exchange Commission filed a parallel civil case.”

Read the NYT article.

Join Our LinkedIn Group

A new University of Iowa study demonstrates for the first time that financial shenanigans at companies decrease markedly in the years after truth tellers come forward with information about wrongdoing inside their operations, according to a report in The New York Times.

While government whistle-blower programs reward some individuals providing tips about corporate fraud, the costs for those people can be high, due to retaliation from their employers and their industry, writes Gretchen Morgenson. But companies subjected to whistle-blower investigations had less financial wrongdoing after being reported, the Iowa study found.

An analysis of the study found that the decrease lasted for at least two years, the period for which data had been collected for all the companies.

Read the NYT article.

RSA has witnessed a huge uptick in targeted phishing email attacks in recent months, the company reports on its website.

“In Q2 alone, RSA identified more than 515,000 phishing attacks in the global market — a 115% rise over Q1 2016 and a remarkable 308% increase over the same time period last year,” writes Heidi Bleau. “The U.S. continued to be the most attacked country, with 48% of global phishing volume, as well as the top hosting country, hosting 60% of all global phishing attacks.  The total cost to global organizations from phishing: $9.1 billion.”

RSA describes a new fraud tutorial, called “Jungle Money,” found in an underground forum. The tutorial tells fraudsters how to create a network of private e-Wallet accounts that are converted through online store merchant services and funneled into a business class e-Wallet account. Following the instructions, a scammer can be protected from discovery by making it difficult to tie the different accounts to one another.

“The scheme includes creating a number of shell accounts via Virtual Credit Cards (VCC), as well as multiple shell e-Wallet accounts, and using them to ‘juggle’ funds between the accounts by charging one account against another for a purchase or service. They then quickly request a chargeback from one of the accounts, thereby receiving a full refund and quickly cashing out the funds,” according to the report.

Read the article and download the report.

Image by NY Photographic

The U.S. Supreme Court will is hearing arguments in a case that could upend the common practice that ranks lenders, employees and other creditors in order of priority as they try to recover their money when a company files for bankruptcy, according to a New York Times article.

“The case has attracted wide attention from academics, workers’ groups and state tax authorities,” writes Libby Lewis. “A decision could affect how much power bankruptcy courts have to approve settlements that do not follow the conventional order of creditor priority and potentially block some parties, in this case the company’s former employees, from any financial recovery.”

The court is hearing Czyzewski v. Jevic Holding Corporation.

Read the NYT article.

The Wall Street Journal is quoting a Trump transition official as saying that Debra Wong Yang, a former Los Angeles U.S. attorney with close ties to New Jersey Gov. Chris Christie, is under consideration for nomination as chairman of the Securities and Exchange Commission.

Yang, who was the top federal prosecutor in the central district of California from 2002 to 2006, met with President-Elect Donald Trump on Monday, report Dave Michaels and Sara Randazzo.

Trump has said he would try to roll back landmark financial regulations imposed by President Barack Obama’s administration. “But the choice of Ms. Yang might signal that a Trump administration would be more focused on continuing the Obama-era record of pursuing high-profile investigations of Wall Street,” they write.

Read the WSJ article.

While Wells Fargo’s new chief executive has responded to his company’s recent unauthorized-accounts scandal by saying his “immediate and highest priority is to restore trust in Wells Fargo,” the bank has been taking a different approach with individual customers, reports The New York Times.

“The bank has sought to kill lawsuits that its customers have filed over the creation of as many as two million sham accounts by moving the cases into private arbitration — a secretive legal process that often favors corporations,” write reporters Michael Corkery and Stacy Cowley.

Customers argue that they couldn’t have agreed to arbitration, considering they didn’t sign up for the accounts in the first place. The bank counters that the agreements in the customers’ original contracts also cover the disputed accounts.

Read the NYT article.