Quyen Truong, former assistant director and deputy general counsel of the Consumer Financial Protection Bureau (CFPB), has joined Stroock & Stroock & Lavan LLP as a partner in the firm’s Washington, DC office.

Truong, a member of the firm’s national Financial Services/Class Action Practice Group, was instrumental in building the new federal agency while implementing the Dodd-Frank Act for finance reform, the firm says in a release. Among other responsibilities, she advised leadership on analysis of consumer financial laws, oversaw review of all enforcement actions and responded to legal challenges to the agency.

“Quyen’s proven track record bridging the technical complexities of financial reforms and their regulatory implications will complement our already prominent Financial Services/Class Action practice and enhance our ability to provide high level strategy and counsel to our clients,” stated Julia Strickland, chair of the Financial Services/Class Action Practice Group and a member of the firm’s Executive Committee.  “We are thrilled that she chose Stroock when she decided to return to the private legal sector.”

While at the CFPB from 2012-2016, Truong was instrumental in helping the Bureau to define the scope of its authorities and develop a new regulatory and enforcement framework for the financial industry.  As a senior leader at the CFPB, she represented the Bureau on the inter-agency Financial Stability Oversight Council (FSOC), managed enterprise risks, and coordinated activities with the Department of Justice, Federal Trade Commission, and banking regulators in high stakes litigation, regulatory and oversight proceedings.  As head of litigation, she also directed the CFPB’s amicus program to advance the agency’s policy and legal interpretations in private litigation.

“Stroock to me epitomizes an ideal law firm in which to work with the financial industry, because of the high quality of its lawyers, their focus on this industry, and their close relationships with market leaders,” says Truong.  “The firm and its clients share my belief that doing right by customers is crucial to achieving business success. I am confident that as we continue to build the practice, we will advance both business and consumer interests.”

Prior to joining the CFPB, Truong served at the Federal Deposit Insurance Corporation (FDIC) as risk management and litigation counsel where she oversaw the investigation and litigation of claims of regulatory violation, fraud, officer/director and other professional liability, following the financial crisis.  In addition, she has held public and private positions with Dow Lohnes PLLC, the Federal Communications Commission (FCC), Howrey LLP and Mayer Brown LLP.

“Quyen’s unique government background, coupled with her 25 years of regulatory policy, compliance and litigation experience adds significant value for our market-leading financial services clients,” noted Alan M. Klinger, Stroock’s co-managing partner.  “We embrace every opportunity to grow our Washington, DC office through highly talented and skilled legal leaders from the government sector.”

Truong received her J.D. from Yale Law School where she was a John M. Olin Fellow in Law, Economics & Public Policy, and her B.A. from Yale University, summa cum laude and Phi Beta Kappa.

As a result of the passage of the Dodd-Frank Act in 2010, the use of mandatory pre-dispute arbitration in consumer transactions has become tenuous, according to an article written by Maurice Shevin for Sirote & Permutt, PC.

He explains that the Consumer Financial Protection Bureau was instructed by law to study and evaluate the effect of such mandatory clauses, and it has been doing so almost since its inception.

“The CFPB holds yet another public forum on the subject in May. I won’t be surprised to see a Proposed Rule come out of this hearing that announces the intent of the CFPB to suppress the use of mandatory arbitration. If the CFPB stays true to form, it will give creditors a period of time to comply with any Rule that it may adopt, Shevin writes.”

Read the article.

Blockchain-based smart contracts have enormous potential to streamline financial transactions and reduce the counterparty risk associated with monitoring or enforcing contractual obligations, write Nicolette Kost De Sevres, Bart Chilton and Bradley Cohen in an article published on the website of DLA Piper.

“Although the blockchain was developed to facilitate cryptocurrency transactions, entrepreneurs are now developing the technology for use in smart contracts,” the explain. “To develop a smart contract, the terms that make up a traditional contract are coded and uploaded to the blockchain, producing a decentralized smart contract that does not rely on a third party for recordkeeping or enforcement. Contractual clauses are automatically executed when pre-programed conditions are satisfied. This eliminates any ambiguity regarding the terms of the agreement and any disagreement concerning the existence of external dependencies.”

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According to Grant Gross from IDG News Service, the banking document record leak now are known as the Panama Papers included 11.5 million confidential documents dating from the 1970s through to late 2015 — 4.8 million emails, 3 million database format files, 2.2. Million PDFs, 1.1 million images and 320,000 text documents. All of these documents were from Panama Law Firm Mossack Fonseca.

Allegedly these leaked documents reveal how dozens of high-profile professionals including public officials in countries including the U.K., France, and China have hidden their wealth abroad to avoid paying taxes, ContractRoom reports on its website.

What is clear is that if indeed these files were hacked from emails or off the server of Mossack Fonseca, this firm was not using a Cloud platform with proper security and encryption to store their documents. It appears they were using an on-site server.

Read the article.

Former Sprint Corp chief executive William Esrey and former chief operating officer Ronald LeMay sued the United States government for allegedly concealing its investigation into accounting firm Ernst & Young LLP’s promotion of tax shelters sold to the executives, Reuters is reporting.

The suit involves a 2002 Internal Revenue Service investigation into Ernst & Young’s promotion of tax shelters to its clients, including the two executives and settled the audit with EY in July 2003, without informing the executives, the lawsuit said.

The plaintiffs alleged that the IRS helped EY conceal the details of investigation from them, which meant they could not defend themselves against allegations by Sprint about their participation in the EY-promoted tax shelter schemes, Reuters reports.

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Harvey Newkirk, a former lawyer at Bryan Cave LLP was sentenced to six months in prison for lying to lenders as part of a failed scheme to buy Maxim Magazine through impersonation, a false e-mail and stolen money, reports Bloomberg BNA.

New York prosecutors wanted the judge to sentence Newkirk, 39, to a “significant term of imprisonment,” describing him as “a facile liar lacking shame, remorse or sympathy for his many victims.” Newkirk’s lawyers sought probation, saying he was a “precocious only child born into a family of God” who lost his job and suffered from the shame of a criminal conviction.

Newkirk, while not part of the most “despicable aspects” of the scheme, “was a knowing and willful perpetrator of fraud in his own part,” U.S. District Judge Jed Rakoff in Manhattan said Thursday at his sentencing. “The jury’s verdict was amply deserved.” He could have been sentenced to more than 17 years in prison under federal sentencing guidelines, the Bloomberg report says.

Second Genome, Inc., a privately-held biopharmaceutical company developing novel medicines through innovative microbiome science, has closed an oversubscribed Series B investment round with $42.6 million in financing, co-led by Pfizer Venture Investments and Roche Venture Fund.

The company was advised in the financing by Latham & Watkins LLP corporate partner Mark Roeder and associate Alexander White in the firm’s Silicon Valley office.

The round brings the combined total investment in the company to $59 million. The round also included new investors Digitalis Ventures, Adveq, LifeForce Capital, MBL Venture Capital, and Mayo Clinic, as well as Series A investors Advanced Technology Ventures, Morgenthaler Ventures, Seraph Group, and individual investor Matthew Winkler, Ph.D.

The funds will be used to further expand the Second Genome Microbiome Discovery Platform in a range of indications associated with barrier function, insulin sensitivity, and immune regulation. In addition, proceeds from the financing will be used to advance the clinical investigation of SGM-1019, a small molecule inhibitor of a key microbiome-mediated target to address inflammation and pain in ulcerative colitis, through human proof-of-concept studies.

“Our approach to developing novel therapeutics based on secreted functional proteins, peptides, and metabolites from the microbiome is highly relevant to the pharmaceutical industry. The progress made by our team to date has allowed us to attract significant interest from a premier group of investors, including Pfizer Venture Investments and Roche Venture Fund,” said Peter DiLaura, Second Genome’s CEO. “This financing will enable us to accelerate our efforts to scale our unique microbiome discovery platform and reach several major inflection points, including key milestones for the SGM-1019 clinical program and other therapeutic programs.”

In conjunction with the new financing, Elaine Jones, Ph.D., Executive Director of Pfizer Venture Investments, and Carole Nuechterlein, Head of Roche Venture Fund, will join the Second Genome Board of Directors.

“Second Genome has demonstrated early success in accessing the previously overlooked and untapped potential of the microbiome in drug discovery and development,” said Dr. Jones. “The company has developed a unique platform and the deep scientific expertise required to create value by mining the microbiome to build a pipeline of novel therapeutics for a broad range of chronic conditions with high unmet medical need.”

Second Genome‘s Microbiome Discovery Platform combines genomics technologies, computational biology, and phenotypic screening to identify novel proteins, peptides, and metabolites from the microbiome that play a causal role in human disease and wellness.

Michael J. Rivera has joined Schiff Hardin LLP as a partner in the Financial Markets and Products Group.

The firm said Rivera defends businesses and individuals in criminal and civil government investigations and enforcement proceedings and conducts internal investigations.

He has experience in securities and financial investigations by the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) and Department of Justice (DOJ). He also counsels companies on compliance and regulatory issues under the federal securities, anti-money laundering, and anti-corruption (FCPA) laws.

He is resident in the firm’s Washington, D.C. and New York offices.

In a release, the firm said:

In addition to working over two decades in private practice at Fried Frank LLP, and, most recently, Venable LLP, Mike gained valuable experience as a government investigator and prosecutor. From 2010-2013, Mike served as Chief Investigative Counsel for the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP). At SIGTARP, Mike managed a premier white collar fraud unit of seasoned federal prosecutors and law enforcement agents engaged in investigations and prosecutions of complex financial frauds. Mike also functioned as SIGTARP’s lead liaison to the senior staff of law enforcement agencies, federal prosecutor offices, securities and bank regulators, and President Obama’s Financial Fraud Enforcement Task Force (FFETF).

“Mike’s breadth of experience makes him a valuable counselor to a wide variety of our clients, from public companies, hedge funds, and accounting firms to securities professionals, executives, and lawyers,” said Marci A. Eisenstein, Schiff Hardin’s Managing Partner. “He is a welcome addition to our firm, particularly as we build out our regulatory capabilities in Washington, D.C.”

Paul Dengel, leader of the firm’s Financial Markets and Products Group, said, “As a public servant, Mike led complex, high-profile securities fraud investigations. In private practice, he helps clients understand, anticipate, and respond to investigations. Relying on his counsel, our clients can make smarter compliance decisions.”

Mike began his legal career as a staff attorney in the Enforcement Division of the Securities and Exchange Commission (SEC), where he conducted investigations into insider trading, disclosure and reporting violations, fraudulent securities transactions, and other violations of the federal securities laws.

“Given the current regulatory and enforcement climate, companies must be more mindful than ever of their compliance policies and obligations,” said Mike. “I look forward to advising Schiff Hardin’s clients on current and pending securities regulations and, when necessary, guiding them through complex investigations and enforcement proceedings.”

Mike earned his J.D. from the University of Pennsylvania Law School and his B.S. from St. John’s University, where he graduated magna cum laude.

Josh Stark, lawyer and head of operations and legal at blockchain consulting firm Ledger Labs, comments in an opinion piece on CoinDesk on “smart contracts” as an alternative form of legal agreement, speculating on how they could come to impact his industry.

“Banks, exchanges, and other financial institutions are actively developing blockchain technologies that will enable them to store and trade real assets over blockchain systems. Nasdaq, in partnership with blockchain startup Chain, has developed and begun testing a private-market equity trading platform,” he writes.

“The impact will not be limited to financial contracts, although these are the most obvious use cases. As techniques are developed that enable other types of property to be recorded and transacted on a blockchain, the possible applications for smart contracts will multiply,” he adds.

Read the article.

On April 6, 2016, after more than five years of anticipation, the Department of Labor (DOL) issued the final fiduciary rule and related guidance. The final fiduciary rule amends and expands the definition of a fiduciary that provides “investment advice” to reflect changes in the financial industry and the state of investment advice as it exists today, reports Sherman & Howard LLC.

“The final rule focuses on ‘conflicts of interest,’ and serves to sweep in a large number of investment advisers who were not previously treated as fiduciaries under the Employee Retirement Income Security Act of 1974 (ERISA). To temper the scope and impact of the final rule, the DOL also issued two new prohibited transaction exemptions (along with certain amendments to existing exemptions),” the report says.

in the article, the firm offers guidance intended to address concerns of these investment advisers with respect to certain prohibited transactions under ERISA and the Internal Revenue Code, while still protecting retirement plans and participants.

Read the article.

A federal judge has ordered Bernard Madoff to submit to a deposition by lawyers for some former customers who lost money when the imprisoned swindler’s firm collapsed in December 2008, Reuters reports.

But the bankruptcy judge in Manhattan set strict limits on what Madoff can be asked, restricting questions to the meaning of more than 91,000 transactions recorded as “profit withdrawal” on the books of the former Bernard L. Madoff Investment Securities LLC.

“Madoff, 77, would be deposed at the North Carolina prison where he is serving a 150-year sentence for running a huge Ponzi scheme,” according to the report.

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The U.S. Commodity Futures Trading Commission (CFTC) Whistleblower Office announced on April 4 that it would issue an award of more than $10 million to a whistleblower whose information led to a successful CFTC enforcement action, reports Katz, Marshall & Banks on its website.

“The award was the largest the agency has ever issued. The recipient of the award and the company penalized were not disclosed — steps purposefully taken by the CFTC to protect the confidentiality of whistleblowers who are concerned about the effect that blowing the whistle may have on their career,” the firm wrote.

“Awards like this one show whistleblowers that blowing the whistle is worth the risk, and will go a long way toward solidifying the CFTC Whistleblower Program,” said Lisa J. Banks a partner in the firm.

Read the article.

Mergermarket has released its Global M&A roundup for the first quarter (Q1) of 2016, including its league tables for legal advisors.

A few key findings include:

• Tax inversion targets, traditionally coming from the Pharma, Medical & Biotech sectors, now appear to be shifting toward other sectors such as Industrials & Chemicals, in a bid to scale up to +$100bn conglomerates. US-based Johnson Control’s US$ 16.2bn bid for Ireland-based Tyco International was the top deal for that sector, and one which also looks set to benefit from Europe’s more favorable corporate tax rates as compared to those of the US. The Tyco/Johnson Controls transaction comprises 73.8% of Q1 total outbound value into targets in the Industrials & Chemicals sector (US$ 21.9bn)
• Law firm Skadden Arps Slate Meagher holds on to the number one spot for deal value for another quarter while Kirkland & Ellis jumped to #2 from #5 in Q1 of 2015. White & Case made a big leap from ninth place in Q1 2015 to third this quarter
• Private equity buyout activity struggled to compete against strategic buyers in 2015, demonstrated by the average price paid last year being just US$ 640.2m compared to a strategic company spending on average US$ 902.8m. However, to date in 2016, the average offer price by a buyout firm has increased slightly to US$ 626.3m, while the average value by strategics has decreased to US$ 607.5m. The following months could provide even more opportunities for buyout firms to secure targets

Download the report.

Donald Trump’s prediction that the U.S. economy was on the verge of a “very massive recession” hit a wall of skepticism from economists who questioned the Republican presidential front-runner’s calculations, reports Reuters.

In a wide-ranging interview with the Washington Post published on Saturday, the billionaire businessman said a combination of high unemployment and an overvalued stock market had set the stage for another economic slump. He put real unemployment above 20 percent, Reuters said.

“There is a very low probability of a massive recession, less than 10 percent,” said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo. “If it happens, it would be because of what is happening overseas, especially in China and Europe.”

Read the article.

Baker Botts has posted an on-demand video webinar hosted by partners Manny Grillo, Shalla Prichard and Jim Prince titled “Baker Botts Corporate Series: Staring Down the Barrel,” in which the moderators discuss the state of the energy finance market and the related legal developments.

The firm says the video shares insights from the finance and restructuring market and highlights some of the latest developments and trends. The program takes a look at the impact of last year’s deal activity and what it will mean for this year. The panelists comment on what they have seen and expect to see this year from both a legal and business perspective and the opportunities created by the markets.

Watch the video.

While the feds have certainly put hurdles in place to prevent abuse, outsourcing IT in a highly regulated industry like banking may very well lead to higher standards and quality outcomes, writes Bruce Harpham for CIO.

“Banking has changed since the global financial crisis in 2008. The steady increase in regulations from Washington, the states and international organizations are now impacting IT leaders,” he writes in the article. “As regulators examine vendor relationships and outsourcing arrangements more closely, there is a significant risk that poorly managed IT could trigger an audit finding, a fine or negative publicity.”

The article discusses some risks to manage as IT leaders plan to review and renew IT service providers in 2016.

Read the article.

The Texas Plain Language law will mandate that auto finance contracts be written at an 11th-grade reading level by 2017, writes Nicole Munro of Hudson Cook LLP in an article published in Auto Dealer Today.

The Consumer Financial Protection Bureau already has a “know before you owe” program aimed at simplifying mortgage disclosures and a few states have had “plain language” laws on the books for awhile, but there has been no discernible move by other states to follow the readability route — until now, she writes.

“Requiring that documents be written in language an 11th grader can understand seems perfectly reasonable. Requiring that legal documents setting forth the rights and duties of parties to a transaction involving tens of thousands of dollars be written in 11th-grade prose? Not so much,” she writes.

Read the article.

About a year after Erin Callan took over as C.F.O. of Lehman Brothers, the then-150-year-old investment-banking institution that turned out to be at the heart of the financial crisis, Callan downed a bottle of sleeping pills on Christmas Eve. It was also six months after Callan resigned from the firm under mounting pressure, and just three months after Lehman filed for bankruptcy, according to a story in Vanity Fair.

In a new book, she tells how she went from being one of Wall Street’s most powerful female executives to feeling like she was set up to take some of the blame for one of the biggest financial collapses in modern history.

She writes how she had been in the job for just three months when she alone was tasked with delivering financial results to investors spooked by Bear Stearns’ fire-sale to JPMorgan, for $2 a share, just two days earlier. Both Lehman’s president and CEO gave her the job of assuring investors that was not the case, the magazine article says.

“Since I was the sole presenter on the call, every public statement about Lehman that was part of the speech and the Q&A is totally attributed to me. Just me,” she wrote.

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A legitimate fear among companies negotiating license agreements exists, and that is the fear of the license counterparty filing for bankruptcy, reports Christopher A. Ward and Cortney E. Mendenhall of Polsinelli PC.

“Given the business interruption that ultimately could occur as a result of a restructuring event, it is vital for practitioners to address bankruptcy or insolvency issues upfront during the negotiation of the license agreement,” they write. “This is especially true for licensees who often rely heavily, if not exclusively, on a licensor for significant aspects of their business.”

They discuss several negotiation and drafting tips that practitioners can utilize to help protect their licensee clients in the event of a bankruptcy filing under chapter 11, of Title 11, of the United States Code (the “Bankruptcy Code”) by the licensor counterparty.

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Derivatives themselves were likely at most a secondary cause of the Lehman’s collapse, and played a more central role in other firms caught up in the financial crisis, like AIG, writes Stephen Lubben of Seton Hall University School of Law. “But the late Harvey Miller suggested that derivatives were responsible for a massive loss in value suffered by Lehman post-bankruptcy. Bryan P. Marsal, the Lehman estate administrator, likewise asserted that as much as $75 billion in value was destroyed, largely as a result of the sudden termination of Lehman’s derivatives book,” he adds.

He has published a paper that suggests that the continuation of the safe harbors “as is” renders chapter 11 nonviable for larger financial institutions, and recent contractual attempts to work around the safe harbors are insufficient to solve the problem, while the increased role of clearinghouses in financial institution failures will force regulators to confront difficult choices.

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