Carl Fornaris to Speak at the Financial Markets Association’s 26th Annual Securities Compliance Seminar

Posted in Events, Financial Regulation

Greenberg Traurig Shareholder  Carl A. Fornaris, co-chair of the Financial Regulatory and Compliance Practice, will speak at the Financial Markets Association’s (FMA’s) 26th Annual Securities Compliance Seminar on April 26 at the B Ocean Hotel in Fort Lauderdale.

Fornaris will speak on the panel titled “Key 2017 Legislative and Regulatory Initiatives” and will review current developments and hot topics in banking and securities law and regulation affecting financial institutions. The panel will identify the likely priorities of the new administration and Congress, including prospects for legislative reform, law enforcement trends, and developments affecting customer protection.

Greenberg Traurig is a sponsor of the seminar.

Ninth Circuit Widens Circuit Split on Whether Dodd-Frank Protects Internal Whistleblowing

Posted in Dodd-Frank, Sarbanes-Oxley Act

On March 8, 2017, in Somers v. Digital Realty Trust Inc., No.15-cv-17352 (9th Cir., March 8, 2017), the Ninth Circuit Court of Appeals affirmed the district court’s denial of the defendant’s motion to dismiss a whistleblower claim brought under the Dodd-Frank Act’s (“DFA”)’s anti-retaliation provision.

In a 2-1 decision, the majority endorsed the approach of the Second Circuit, and not that of the Fifth Circuit, in holding that Congress did not intend to limit DFA whistleblower protections to only those who disclose information to the Securities and Exchange Commission (“SEC”). Rather, the court held that the DFA anti-retaliation provision also protects those who are fired after making internal disclosures of allegedly unlawful activity under the Sarbanes-Oxley Act (“SOX”) and other securities laws, rules, and regulations.

To learn more, please see GT AlertNinth Circuit Widens Circuit Split on Whether Dodd-Frank Protects Internal Whistleblowing.”



Confidential Financial Information of Non-Party Customers Placed at Risk When Litigants Subpoena FINRA Enforcement Files

Posted in Financial Regulation, FINRA, Litigation, SEC, Securities

An increasingly common tactic among claimants’ lawyers in Financial Industry Regulatory Authority (FINRA) arbitrations is to issue subpoenas to securities regulators, including FINRA itself, calling for the production of investigative files. This is accomplished by asking the arbitration panel to issue a subpoena pursuant to FINRA Rule 12512 (or Rule 13512 in an employee versus firm case). The respondent firm typically opposes the issuance of such a subpoena on a number of grounds, including the fact that securities regulators have much broader investigative powers than do private litigants and often demand and collect large amounts of personal confidential information (PCI) about customers and employees who may not be parties to the arbitration in which the subpoena is sought.

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Lex Machina’s Securities Litigation Report 2017 Names Greenberg Traurig a Top Federal Securities Defense Firm

Posted in Financial Services Litigation, Securities

According to the report issued last week, Greenberg Traurig is among the top 15 firms in the United States, defending national and global financial institutions against bet-the-company securities litigation cases. The report found that securities case filings rose 23 percent from 2015 to 2016, to 1,144 cases. According to Lex Machina, securities litigation is relatively steady compared to other areas of the law, with little variability from year to year. The number of securities cases in a given year tends to depend on macroeconomic trends, so if there is little variability in the national economy, litigation would be expected to remain the same, but a downturn could result in an increase in securities suits.

GT attributes its strength in this area to the fact that the firm has one of the broadest and deepest securities litigation practices in the country. The firm has been lead defense counsel in hundreds of securities class actions, derivative lawsuits, and SRO, state and SEC investigations and enforcement actions. These include some of the largest and most complex regulatory actions ever filed and one of the most highly publicized securities fraud cases in recent times. The firm has one of the most experienced and largest teams in the United States representing both market leading broker-dealers and Directors and Officers to final award or judgment in thousands of securities arbitrations and trials throughout the country. The team has tried some of the largest arbitration cases to verdict, including numerous matters involving more than $100 million. The attorneys regularly handle matters before the Financial Industry Regulatory Authority Dispute Resolution, American Arbitration Association, National Futures Association, and state and federal courts across the country.

President Trump to Nominate CFTC Acting Head J. Christopher Giancarlo

Posted in Commodities, Dodd-Frank

President Trump has announced his intention to nominate Commodity Futures Trading Commission (CFTC) acting head J. Christopher Giancarlo as permanent chairman. This news is of high importance for the alternative investment community, which will be impacted by  Giancarlo’s regulatory vision for the agency and Dodd-Frank reform.  As a Republican commissioner at the agency since 2014, and more recently as its interim chairman, Giancarlo has openly criticized crucial portions of the Dodd-Frank Act. While a president does not have the power to unilaterally repeal an Act such as Dodd-Frank, a vote by Congress could. In this case, however, it does not appear that the necessary votes for such action are there. The alternative investment community is focusing on the impact that Chairman Giancarlo could have on the agency’s plans regarding the enforcement of Dodd-Frank and its related rules.

Greenberg Traurig’s Koichiro Ohashi to Speak About Fintech in Connection to Luxembourg and Japan

Posted in Events, Fintech

Koichiro Ohashi, shareholder in the Tokyo office of international law firm Greenberg Traurig, LLP will participate in a program titled, “A taste of FinTech From 2 Angles … and 2 Sides of The World” on March 14 in Luxembourg. The discussion will address the challenges and opportunities of Fintech in Luxembourg and Japan.

Greenberg Traurig to Participate at the FIBA Anti-Money Laundering Compliance Conference

Posted in Cybersecurity, Events, Financial Regulation, Gaming

Greenberg Traurig is proud to sponsor and participate at the FIBA (Florida International Bankers Association) Anti-Money Laundering Compliance Conference March 6 – 8 at the InterContinental Miami. Rudolph W. Giuliani, chair of the firm’s Cybersecurity, Privacy and Crisis Management Practice and former New York City Mayor, will deliver the keynote address on how the 2016 elections impact regulatory reform. Greenberg Traurig’s Mark Clayton and Carl Fornaris will also speak at the conference.

Carl Fornaris, co-chair of the firm’s Financial Regulatory and Compliance Practice will moderate the panel, “Lessons Learned from the U.S. Treasury Department’s Recent Enforcement Actions Against Financial Institutions in the Region” March 8 from 4:15 p.m. – 5:30 p.m. Mark Clayton, co-chair of the firm’s Global Gaming Practice will speak on the panel, “Compliance Standards for Casinos and Money Service Businesses” March 7 from 11:25 a.m. – 12:40 p.m.


High-End, Cash-Only Real Estate Sales in Six Major Metropolitan Areas Remain Subject to Mandatory AML Reporting Requirements

Posted in Financial Crimes Enforcement Network, Real Estate

On Feb. 23, 2017, the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCEN) extended by an additional six months its existing Geographic Targeting Orders (GTOs) that require U.S. title insurance companies, their subsidiaries and agents (collectively, the Title Insurance Companies) to identify the natural persons behind shell companies used to pay “all cash” for high-end residential real estate in six major metropolitan areas.

To read more, please see GT AlertHigh-End, Cash-Only Real Estate Sales in Six Major Metropolitan Areas Remain Subject to Mandatory AML Reporting Requirements.”

U.S. Court of Appeals for D.C. Circuit Vacates Panel Decision in PHH v. CFPB, Grants Rehearing En Banc

Posted in CFPB

On Feb. 16, 2017, the U.S. Court of Appeals for the D.C. Circuit granted the request for en banc review by the Consumer Financial Protection Bureau (CFPB) in the PHH v. CFPB matter.[1]  The order vacates the prior judgment by a three-judge panel that the CFPB’s structure was constitutionally infirm, and which remedied that infirmity by making the CFPB’s director removable at the discretion of the president.  Accordingly, until the full Court issues its ruling, the CFPB director can only be removed for cause.

The Court directed the parties to brief three specific issues, each of which relates to constitutional questions:

1) Is the CFPB’s structure as a single-director independent agency consistent with Article II of the Constitution and, if not, is the proper remedy to sever the for-cause provision of the statute?

2) May the court appropriately avoid deciding that constitutional question given the panel’s ruling on the statutory issues in this case?

3) If the en banc court, which has today separately ordered en banc consideration of Lucia v. SEC, 832 F.3d 277 (D.C. Cir. 2016), concludes in that case that the administrative law judge who handled that case was an inferior officer rather than an employee, what is the appropriate disposition of this case?

Question 1 directly addresses the core ruling of the three-judge panel – that the single-director structure of the CFPB was unconstitutional and that the appropriate remedy was to make the CFPB director removable at the discretion of the president, similar to other executive agencies.  As this was the core ruling on appeal, the fact that the Court is seeking briefing on this topic is entirely expected.

Question 2 addresses a point raised by Judge Henderson in her separate opinion, which concurred in the outcome but which dissented on the Constitutional questions.  Judge Henderson’s opinion was that there was no reason for the Court to even reach the question of whether the CFPB’s structure was constitutional.  As the Court was already granting PHH complete relief in ruling in its favor on the interpretation of RESPA, Judge Henderson argued that there was no reason for the Court to reach the constitutional questions.  If the full court were to agree with Judge Henderson’s logic, then the ruling for PHH would be upheld, but the challenge to the CFPB’s structure would not be addressed by the Court.

Question 3 also addresses a point raised by a concurring opinion, in this case that of Judge Randolph.  Judge Randolph agreed with the ruling against the CFPB, but on the independent grounds that the administrative law judge (ALJ) who issued the initial ruling against PHH was an “inferior officer” under the meaning of the Appointments Clause of the Constitution,[2] which requires that such officers be appointed by the president, courts of law, or the heads of departments.  Because the ALJ was not so appointed, but was instead assigned by the SEC’s chief ALJ pursuant to an agreement between the CFPB and the SEC, Judge Randolph would have declared the proceeding against PHH unconstitutional for that separate rationale.  This question of the Constitutional status of ALJ’s is clearly an area of interest to the court, given that the Court granted en banc rehearing on the same day on the Lucia v. SEC case raising similar questions regarding the Appointments Clause of the Constitution.

It is worth noting that the Court did not specifically request briefing on the propriety of the director’s interpretation of RESPA or the relevant statute of limitations.  While nothing precludes the full Court from reconsidering that issue, the fact that no briefing was requested on it, along with the fact that all three judges in the previous panel decision agreed to overturn the director’s ruling, suggests an uphill climb for the bureau as to the merits of its position on RESPA.

The court will hear oral argument on May 24, 2017.


[2] U.S. Const. Art. II, §2, cl. 2.

NY Governor’s Proposed Budget Forecasts Increased Regulation of Fintech

Posted in Fintech

In his proposed budget for fiscal year 2017-2018, New York Governor Andrew Cuomo advanced changes to the New York Banking Law that would give the Department of Financial Services (NY DFS) increased licensing authority over online and marketplace lenders.[1] The proposed budget would prohibit any entity from engaging in the business of making loans in New York of $25,000 or less to individuals for personal, family, household, or investment purposes except as authorized by regulations issued by the Superintendent of NY DFS and after first obtaining a license. Similar restrictions would be imposed on entities making business loans of less than $50,000. If enacted, this requirement would take effect Jan. 1, 2018.

According to the proposal, an entity would be considered to be engaging in the business of making loans in New York even if it is not the lender, but instead an entity that “purchases or otherwise acquires from others loans or other forms of financing, or arranges or facilitates the funding of loans” to individuals residing in the state of New York. Depending on the regulations eventually issued by the NY DFS, this change in the law could require companies currently engaging in small-balance lending to NY borrowers to cease their activities in New York until they obtain a license. Obtaining such a license could take a significant amount of time, and cause a significant interruption to the entity’s business, unless the NY DFS were to authorize entities to continue business while the license application is pending.

The New York Legislature is in the process of completing hearings on the Governor’s proposed budget. The Senate and Assembly is each expected to introduce and pass legislation that stakes out the House’s position on the Governor’s proposals on or before March 15. From there, negotiations will begin in earnest between the Legislature and the Executive, with the goal of reaching a budget agreement on or before March 31, 2017.

This development further highlights the significance of the plan by the Office of the Comptroller of the Currency (OCC) to charter financial technology companies under a special-purpose federal charter.[2] Any entity granted a federal banking charter would be largely exempted from such state licensing requirements, just as federally chartered banks are not typically subject to state licensing. The preemption of state licensing and regulatory authority was cited by the Conference of State Bank Supervisors as one of reasons that they were “firmly opposed” to any special-purpose federal charter for Fintech companies.[3] While the requirements of an OCC charter may prove to be unpalatable or difficult to satisfy for certain Fintech companies, if the licensing regulations promulgated by the NY DFS impose similar regulatory burdens, or if other states follow suit with similar or more stringent requirements, then the comparative appeal of an OCC charter is likely to improve.

[1] at Part EE.

[2] See GT Alert, “OCC Consideration of Special Purpose Fintech Charters Draws Rapid Reaction from State Banking Regulators,” Dec. 15, 2016.

[3] See Letter to Comptroller Curry from the Conference of State Bank Supervisors dated Nov. 14, 2016, p. 2.