NY Department of Financial Services Proposes its Own Fiduciary Rule in Response to U.S. DOL Delay

Posted in Financial Regulation, Retirement

In February, President Trump signed an Executive Order directing the U.S. Department of Labor (DOL) to review the fiduciary rule for brokers that President Obama’s Labor Department adopted. The federal rule would expand the definition of “investment advice” in the retirement context and require brokers to provide advice that is in the consumer’s best interest. While the federal fiduciary rule is under review, the U.S. DOL delayed some of the rule’s requirements until July 1, 2019. In response, Governor Cuomo announced that the New York Department of Financial Services (DFS or Department) proposed a rule requiring brokers to put their customers’ best interests first in life insurance and annuity transactions.

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Will Patent Sharing Organizations Boost Blockchain Innovation?

Posted in Blockchain

Companies across many different industries are starting to look toward blockchain technology as a way to conduct business more effectively, efficiently, and securely. As a result, there are new blockchain technology startups and strategic partnerships being established at break-neck speed. And, like any burgeoning industry, there seem to be new innovations introduced almost every day.

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Greenberg Traurig’s Nanette Aguirre to Speak at Florida Alternative Investment Association Global Macro Perspective 2018

Posted in Events

Nanette Aguirre, corporate shareholder, will participate in the Florida Alternative Investment Association (FLAIA) Global Perspective 2018 Conference in Miami, FL, Dec. 5. Aguirre will participate as a speaker and provide an update on developments in current regulation and market trends. Aguirre is joined by a series of panelists from private funds who will address the global trading market. Greenberg Traurig is a sponsor of the program. Aguirre is a board member of FLAIA.

Greenberg Traurig Shareholders Jennifer Weddle and Gil Rudolph to Speak at 2017 Tribal Financial Regulators Conference

Posted in Events, Financial Regulation

Jennifer Weddle and Gil Rudolph, Greenberg Traurig, LLP shareholders, will participate in the 2017 Tribal Financial Regulators Conference in Minneapolis, Nov. 30. Rudolph and Weddle will speak in the session titled “Hot Topics in Federal Consumer Protection and Best Practices for Addressing All That is in Third Party Vendor Contracts.” The conference brings together tribal financial regulators who engage in consumer lending and other financial services from tribes throughout the country.

Greenberg Traurig’s Nanette Aguirre to Speak at Minorities in Restructuring and Alternative Investments Networking Event

Posted in Events, Fintech, Technology

Nanette Aguirre, Corporate Shareholder, will participate in the Fall 2017 Minorities in Restructuring and Alternative Investments (MRAI) Networking event in New York, NY, Nov. 30. Aguirre will participate in the program titled “Industries of the Future: How new technology and thinking will come of age and disrupt the status quo.” A panel of distinguished speakers from an array of leading private funds and financial institutions will address how their internal teams and investors are making demands in the Fintech space (blockchain/smart contracts) and the regulatory developments affecting new technology. Aguirre is a board member of MRAI.

Greenberg Traurig’s Maria Sendra to Speak at Blockchain Expo North America 2017

Posted in Blockchain, Events

Maria Sendra, a shareholder in the Silicon Valley office of global law firm Greenberg Traurig, LLP, will speak at Blockchain Expo North America 2017, at the Santa Clara Convention Center. The expo will feature interactive panel discussions and solution-based case studies with a focus on learning and building partnerships in the emerging blockchain space, and will explore the industries that are set to be disrupted most by this new technology. Sendra will participate in the “What are the Regulatory Implications of Using Blockchain Technologies,” panel Nov. 29. Greenberg Traurig is also a sponsor of the expo.

Richard Cordray Resigns — Who’s going to mind the CFPB store?

Posted in CFPB, Government

With the announcement of Richard Cordray’s resignation as Director of the federal Consumer Financial Protection Bureau (CFPB) by the end of November 2017, the latest D.C. guessing game is who will take over the helm of the CFPB. This simple question is really two questions. First, who will run the agency on an interim basis? Second, who will President Trump nominate to be the permanent Director, a position requiring Senate confirmation? This second question will likely be the subject of much political discussion and may not be answered for months.

To read more, please see GT AlertRichard Cordray Resigns – Who’s going to mind the CFPB store?

Regulators Weigh in on Digital Assets, Tokens, Securities, and Derivative Instruments Used in ICOs

Posted in Blockchain, Blockchain Technology Task Force, CFTC, SEC, Virtual Currency

The rise of blockchain technology ventures raising money preternaturally through initial coin offerings and token generation events (collectively, ICOs) is a capital formation disruptor, one which has and will continue to spawn considerable futures, fortunes, failures — and frauds. Blockchain-based ICOs have, through 121 offerings closed during January-August 2017, raised over $1.78 billion, with an expected amount at year-end 2017 of over $3 billion according to publicly-available estimates. While IPOs raised about $12 billion (and startups $22 billion) thus far in 2017, the amount raised through ICOs is impressive for a new asset class. By some sources ICOs have exceeded angel, venture capital, and seed funding reported during some months of 2017. The shrouded world of blockchain technology and range of offerings masks identities and sourcing of investors in ICOs. It is speculated that funds have been primarily sourced from early investors profiting in cryptocurrency technologies.

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Greenberg Traurig’s Gil Rudolph and Lori S. Nugent Participate at CCFL’s Annual Consumer Financial Services Conference

Posted in CFPB, Cybersecurity, Events, TCPA

Gil Rudolph, co-chair of the Financial Regulatory and Compliance Practice, and Lori S. Nugent, shareholder, will participate in the Conference on Consumer Finance Law Annual Consumer Financial Services Conference in Ft. Worth, TX, Nov. 2-3rd. Rudolph will moderate the panel session titled “CFPB Developments” on Thursday, Nov. 2. Nugent will speak in a panel session titled “Cybersecurity” on Friday, Nov. 3. The conference program will focus on issues common to most financial services companies, including limited English proficiency, ADA accessibility, vendor management, CFPB updates, cybersecurity, fair lending, debt collection, and TCPA, among other areas. Greenberg Traurig is a sponsor of the conference.

SEC Investor Advisory Committee Considers Blockchain Technology

Posted in Blockchain, Blockchain Technology Task Force, SEC, Securities

On Oct. 12, 2017, the Investor Advisory Committee of the U.S. Securities Exchange Commission (the SEC) hosted a panel discussion on blockchain technology. The session represented another instance of the SEC’s ongoing consideration of the impact of blockchain technology on U.S. securities markets and investors.

Different perspectives on blockchain technology and its application to U.S. securities markets and transactions were shared by the panelists. The panel included Jeff Bandman, a former fintech advisor to the Commodity Futures Trading Commission; Michael Bodson, president and CEO of the Depository Trust & Clearing Corporation (DTCC); Nancy Liao, executive director for the Yale Law School Center for the Study of Corporate Law; Adam Ludwin, CEO of Chain; and Fredrik Voss, vice president of Nasdaq.

SEC Chairman Clayton, during his introduction, emphasized that the SEC continues to seek to foster innovative means to access capital, while continuing to ensure investor safety.  Accordingly, the SEC continues to examine the impact of blockchain technology, and continues to raise concerns about avenues created by blockchain technology for bad actors.

Panelists presented an overview of blockchain technology, emphasizing the cryptographic security features inherent in blockchain, which permit parties to transact without having any basis to trust the other party.  The degree of trust between parties and the existence of any external factors authenticating a party’s identity and bona fides may impact the configuration of a distributed ledger system, particularly whether a blockchain is permissioned or permissionless.

The Chairman of DTCC considered the impact of blockchain technology on market infrastructure, and emphasized that DTCC has made plans to consider blockchain and to align its use of technology with its overall objectives.  DTCC continues to evaluate blockchain applications despite speculation that blockchain does not support a central party performing clearinghouse functions.

Several themes arose from the discussion:

  • Cryptocurrency offerings remain subject to scrutiny.
    • Members of the Investor Advisory Committee expressed skepticism about arguments that Initial Coin Offerings (ICOs) generally constitute anything other than investment contracts that should be subject to regulation.
  • Widespread blockchain implementation is years away.  Panelists emphasized that, despite the attention surrounding blockchain, they do not yet consider blockchain technology to be “enterprise-ready” and not ready for widespread implementation.  Blockchain remains in an evolutionary phase.
    • For adoption to specific financial market functions, blockchain requires:
      • Scalability – DTCC legacy systems handle 100 million transactions per day/25,000 per second;
      • Interoperability — with other blockchain ledgers and legacy systems; and
      • Established governance protocols (relating to access, the ability to terminate operation of an erroneous smart contract, etc.).
    • Any blockchain implementation must demonstrate the capacity to handle real-world transactions.
      • Blockchain solutions will be benchmarked against existing technological systems and processes.
        • Replacing existing payment, online storage, and other services with blockchain products may often not result in performance improvements.
        • Blockchain products and smart contracts may lack the robustness to replace all relevant functions handled by a legacy IT system.
      • Nasdaq has deployed blockchain ledger technology to manage private company capitalization tables. It will eventually commence proof of concept work to address public market trades.
    • Investment in existing systems has been massive.  Projects to reduce settlement times to T + 2 were implemented over a 5 year period.  Replacing legacy systems without appropriate transition planning would result in system write-offs in the billions of dollars.
  • Blockchain may change the rules of engagement for regulators. Regulators may be permitted and/or require direct, real-time access to blockchain records.
    • Parties may provide dedicated “regulator nodes” or “auditor nodes”
    • Real-time access could facilitate earlier detection of wrongdoing and earlier intervention
    • Obstacles to regulator adoption of blockchain:
      • Common standards are required so that data will be available in consistent and comprehensible ways.
      • Government procurement rules intended to protect against corruption and promote transparency can be burdensome and inefficient.