Consumer Financial Services Basics – ABA Conference

The National Law Review is pleased to bring you information regarding the upcoming Consumer Financial Services Basics Conference sponsored by the ABA:

When

October 08 – 09, 2012

Where

American University

Washington College of Law

Washington, DC

Program Description

Facing the most comprehensive revision of federal consumer financial services (CFS) law in 75 years, even experienced consumer finance lawyers might feel it is time to get back in the classroom. This live meeting is designed to expose practitioners to key areas of consumer financial services law, whether you need a primer or a refresher.It is time to take a step back and think through some of these complex issues with a faculty that combines decades of practical experience with law school analysis. The classroom approach is used to review the background, assess the current policy factors, step into the shoes of regulators, and develop an approach that can be used to interpret and evaluate the scores of laws and regulations that affect your clients.Program FocusThis program will explain each of the major sources of regulation of consumer financial products in the context of the regulatory techniques and policies that are the common threads in a complex pattern, including:

  • Price regulation and federal preemption of state price limitations
  • Truth in lending and disclosure requirements
  • Marketing, advertising and unfair or deceptive conduct
  • Account servicing and collections
  • Regulating the “fairness” of financial institution conduct
  • Data security, fraud prevention and identity protection
  • Consumer reporting: FCRA & FACT Act
  • Fair lending and fair access to financial services
  • Remedies: regulators and private plaintiffs
  • Regulatory and legislative priorities for 2012 and beyond

Who Should Attend…The learning curve for private practitioners, in-house lawyers and government attorneys to understand the basics and changes to CFS law is very steep. This program is a great way to jump up that curve for:

  • Private practitioners with 1-10 years of experience who focus on CFS products or providers
  • In-house counsel at financial institutions and non-bank lenders
  • Government attorneys, in financial practices regulatory agencies
  • Compliance officers (who may be, but need not be, attorneys)

SEC Issues Risk Alert on Campaign Contributions and Pay-to-Play Prohibitions

The National Law Review recently published an article regarding Campaign Contributions written by Paul S. Maco, Laurence A. Levy, Patrick K. Craine, Joshua C. Zive, and Britt Cass Steckman of Bracewell & Giuliani LLP:

 

At the beginning of the Labor Day holiday and in the heart of the campaign season, the SEC’s Office of Compliance Inspections and Examinations issued a Risk Alert targeting compliance by investment banks underwriting municipal bonds with rules limiting political contributions to campaigns of state and local government officials who select firms to be underwriters, remarketing agents, and financial advisors for municipal securities. The Risk Alert is a reminder of existing rules; no new requirements were announced.

The Risk Alert should be of particular interest to:

  1. Candidates for state or local government office and their campaign staff, and candidates for federal office currently holding state or local government office; and
  2. Municipal finance professionals and their firms.

For Candidates

The Risk Alert serves as a reminder to candidates for state and local government office and candidates for federal office who are current state and local elected officials of federal rules that restrict contributions by potential donors to your campaign if (1) those potential donors are firms or certain of their employees that underwrite, act as remarketing agent, or serve as financial advisors for municipal bond offerings and (2) the state or local office you seek or currently hold involves you in the selection of firms for such work. Penalties on contributors are so severe that when made inadvertently, contributors will usually seek return of the contribution.

Municipal Securities Rulemaking Board (MSRB) rule G-37 generally prohibits firms from serving as underwriters, remarketing agents, or financial advisors for an issuer of municipal securities for two years after making a campaign contribution to an official of the issuer who awards or may influence the award of such assignments unless the contribution is no more than $250 per election cycle and the contributor is entitled to vote for the official (the “de minimus exemption”). In addition, such firms and their covered employees, known as municipal finance professionals, are prohibited from soliciting campaign contributions and providing other services for the campaigns of such officials.

The consequences of violation of rule G-37 are serious. One consequence is known as “the death penalty”: firms that act as an underwriter after a covered employee makes a contribution not subject to the de minimusexemption are typically required in SEC enforcement actions to forfeit the gross revenues received from all underwritings for the issuer in the two-year period following the contribution. If the contribution was made inadvertently, firms that discover, report, and recover the contribution may seek – but are not automatically assured of – relief from the death penalty.

Candidates and their campaign staff may wish to be alert to this regulation and avoid accepting contributions which will later need to be reimbursed.

For Municipal Finance Professionals

The Risk Alert serves as a reminder of MSRB rules in place since 1994 on campaign contributions applicable to brokers, dealers, and municipal securities dealers and their municipal finance employees active in municipal securities markets. The Risk Alert specifically intends to call the attention of municipal firms to compliance concerns of SEC staff observed during their examinations, including:

  • Compliance with the two-year ban following a political contribution by a municipal finance professional beyond the de minimus exception;
  • Potentially deficient record-keeping;
  • Failure to file accurate and complete forms G-37 with the MSRB; and
  • Inadequate supervision.

The Risk Alert also identifies practices that certain firms have taken with respect to avoiding pay-to-play practices, including:

  • Providing training to municipal finance professionals;
  • Required knowledge and compliance self-certification by covered employees;
  • Use of internet and other surveillance techniques;
  • Identification and restriction of employees who may become subject to rule G-37 through promotion;
  • Required preclearance, restriction, or prohibition of political contributions; and
  • Separation of surveillance functions to avoid any possibility of adverse action towards an employee based on political preferences.

© 2012 Bracewell & Giuliani LLP

Class Actions National Institute October 24-25, 2012

The National Law Review is pleased to bring you information about the upcoming ABA Class Actions National Institute:

Attendees of the program will:

  • Gain practical knowledge on how judges view class-action lawsuits
  • Review class-action lawsuits in the Supreme Court
  • Learn trial techniques to sharpen their skills as class-action litigators

Who should attend?

  • Attorneys who litigate class-action lawsuits
  • In-house counsel and litigators interested in learning about the current state of class actions, including recent Supreme Court class-action decisions
  • Lawyers who litigate class-certification motions

When

October 24 – 25, 2012

Where

  • Sax Chicago
  • 333 N Dearborn St
  • Chicago, IL, 60654-4956
  • United States of America

Insurer Bound by Policyholder’s Settlement of Questionable Liability Case

Neal, Gerber & Eisenberg LLP‘s Jill Berkeley recently had an article, Insurer Bound by Policyholder’s Settlement of Questionable Liability Case, published in The National Law Review:

In Home Federal Savings Bank v. Ticor Title Insurance Company, No. 1:10-cv-0999 (Sept. 6, 2012), the Seventh Circuit held that the policyholder mortgage company was entitled to be reimbursed for settling a potentially covered mechanics lien action, even when it had a meritorious defense.  The court emphasized that the choice to settle rather than risk paying for litigation and possibly losing priority of its security interest was the prerogative of the insured, when faced with abandonment by its insurer.  The insured specifically purchased coverage for subsequently filed mechanics liens to cover the risk of litigation costs of defense.  “As we see the case, Home Federal was seeking only the peace of mind it had paid for, not a windfall.”

The court affirmed the longstanding Indiana rule that when an insured elects to settle a third party claim after the insurer has wrongfully denied, the settlement is binding on the insurer so long as the claim was within the policy’s coverage and the settlement was reasonable and made in good faith.  Therefore, the Seventh Circuit reversed the ruling of the district court, finding that the court should have granted the insured’s motion for summary judgment and denied the insurer’s motion.

© 2012 Neal, Gerber & Eisenberg LLP

Securities Fraud National Institute – November 15-16, 2012

The National Law Review is pleased to bring you information about the upcoming Securities Fraud Conference by the ABA:

This national institute is an educational and professional forum to discuss the legal and ethical issues surrounding securities fraud.

Program highlights include:

  • Panel discussions with senior officials from the U.S. Securities and Exchange Commission  and U.S. Department of Justice
  • Updates since the passage of the Dodd-Frank Act
  • Breakout sessions focused on new financial reform legislation
  • Strategies for practitioners when representing clients under investigation, indicted and during appeals

When

November 15 – 16, 2012

Where

  • Westin New Orleans Canal Place
  • 100 Rue Iberville
  • New Orleans, LA, 70130-1106
  • United States of America

Who owns your Twitter account?

As more and more employees are tasked with — or even hired for the express purpose of — tweeting on behalf of their employer, it is important to think about ownership of the twitter account from which they tweet.  A twitter account can be an important asset to a business or organization because the account (and the owner thereof) amasses followers who can become customers, fans and/or contributors.  Those followers can also share the marketing and informative content your company or organization chooses to share with others by re-tweeting, liking or quoting your tweets, or by old-fashioned word-of-mouth.  If they suddenly disappear, it may take significant time and effort to amass those followers again, and some you may never get back.

That is exactly what happened to a popular mobile phone company, PhoneDog Media.  Noah Kravitz, created a twitter account on behalf of his employer, utilizing the handle @PhoneDog_Noah.  From this account, he tweeted regularly regarding work and personal issues.  Eventually he amassed over 17,000 followers over four years.  At the time, PhoneDog did not have any policies in place that articulated whether Mr. Kravitz or PhoneDog owned the twitter account.

When Mr. Kravitz left his employment to join a competitor, he did not just abandon the twitter account and he did not provide the password to his successor at PhoneDog.  Instead he simply changed his handle to @noahkravitz and continued using the account, maintaining his own personal and professional communications with his 17,000 followers.

In July 2010, PhoneDog filed suit against Kravitz, alleging misappropriation of trade secrets, interference with economic advantage and conversion.  PhoneDog values its damages at $2.50 per follower per month (for eight months that Kravitz used the account for his own benefit), which amounts to $340,000.00 in damages.  Regarding this value, PhoneDog has issued the following statement: “The costs and resources invested by PhoneDog Media into growing its followers, fans and general brand awareness through social media are substantial and are considered property of PhoneDog Media L.L.C. We intend to aggressively protect our customer lists and confidential information, intellectual property, trademark and brands.”

Kravitz tells a different story.  He maintains that PhoneDog initially allowed him to maintain the account, asking him in exchange to tweet from time-to-time, and that he upheld his part of the bargain.

A U.S. District Court sitting in the Northern District of California has allowed Phone Dog’s claims, for the most part, to proceed on the merits.  The Court recognized the twitter account at issue as a valuable property right.  As this matter continues to be litigated it will be interesting to watch what value is ultimately placed on twitter followers, and who is ultimately granted ownership of the account.  The case has potential implications for a number of employees who tweet on behalf of their employers, including newspapers and magazine writers who utilize their own likeness to amass readership via twitter.

In light of PhoneDog v. Kravitz, it may be time to look at whether your company or organization could benefit from a written policy with delineates who owns twitter handles and other social media accounts utilized by your employees to market your products or services.

© 2012 by McBrayer, McGinnis, Leslie & Kirkland, PLLC.

ICC Rules of Arbitration – October 8-9, 2012

The National Law Review is pleased to bring you information about the upcoming ICC Training:

  • Location: ICC Headquarters, Paris
  • Date: 08/10/2012 – 09/10/2012
  • Event Type: Training
  • Language: French, English

After the success of the first round of trainings, ICC will be hosting another 2-day session on the 2012 ICC Rules of Arbitration in Paris in October.

Learning outcomes

  • Acquire theoretical and practical knowledge of the main changes in the 2012 ICC Rules of Arbitration on important topics such as Emergency Arbitrator; Case Management and Joinder, Multi-party/Multi-contract Arbitration and Consolidation
  • Study the 2012 ICC Rules of Arbitration in small working groups of about 10 participants applying various provisions to mock cases
  • Gaining valuable insights from some of the world’s leading experts in arbitration including persons involved in the drafting of the New ICC Rules of Arbitration

Who should attend?
Arbitrators, legal practitioners and in-house counsel who already have knowledge in arbitration and wish to know more about the 2012 ICC Rules of Arbitration.

Varnum Wins Important Victory Against Blue Cross Blue Shield of Michigan for Recovery of Millions in Hidden Fees

Varnum LLP recently announced a major decision in an on-going class action lawsuit:

Varnum LLP

For more than a year, Varnum has pursued claims against BCBSM on behalf of more than a dozen companies that use BCBSM to administer their self-funded health benefit programs.  Four disputes have been settled, and Varnum is actively litigating ten more in federal court, each of which alleges that BCBSM violated federal law (ERISA) by charging hidden fees.  The pending lawsuits collectively seek repayment of many millions of dollars in fees charged by BCBSM.

The United States District Court recently entered summary judgment in favor of Varnum’s clients, holding that BCBSM engaged in self-dealing when it unilaterally decided how much in fees to pay itself.*  This was a clear violation of ERISA and established liability against BCBSM.  Those cases will now proceed to trial to determine the amount BCBSM owes the plaintiffs for its violations of law and whether the plaintiffs filed their claims in a timely manner (statute of limitations).

Hidden Access Fees

The central issue in these cases relates to hidden “network access fees” charged by BCBSM.  The hidden fees are in addition to the administrative fees BCBSM customers agree to pay.
Prior to 1994, BCBSM charged its self-funded customers various surcharges and subsidies to prop up its insured lines of business, but those surcharges and subsidies were disclosed on the bill. Over time, BCBSM’s self-funded customers started objecting to those charges. Some refused to pay them all together.

According to an internal BCBSM memo, BCBSM had become “its own worst enemy” because the subsidies and surcharges were “highlighted for all to see.”  The internal memo recommended against disclosing the surcharges and subsidies as billed items, and instead collecting more revenue by marking up hospital claims costs, and that is what BCBSM has been doing since 1994.  In other words, if an actual hospital claim was for $1,000, BCBSM would bill the customer a higher amount, say $1,100, and retain the additional $100 for itself.  According to the memo, “changes to these costs will be inherent in the system and no longer visible to the customer.”

Indeed, BCBSM reports hospital claims to its self-funded customers several times a year without mentioning the amount of access fees it keeps for itself.  In recent years the access fees are included on a pie chart, but the actual hospital claims reports continue to hide the amount of access fees BCBSM keeps.  BCBSM also does not include the amount it keeps in access fees when it discloses total compensation for federal reporting purposes.

Faced with this evidence, the District Court found the general term “Access Fees” to be “misleading,” and concluded that BCBSM “decided to hide the [Access Fees] by merging them with hospital claims on billing statements.”  The Court also noted that the customer bills were not itemized to indicate how much money was owed for the fees because “that would have defeated the purpose of the program.”

Copyright 2012 Varnum LLP

Criminal Tax Fraud and Tax Controversy 2012 – December 6-7, 2012

The National Law Review is pleased to bring you information about the upcoming ABA Criminal Tax Fraud Conference:

When

December 06 – 07, 2012

Where

  • Wynn Las Vegas
  • 3131 Las Vegas Blvd S
  • Las Vegas, NV, 89109-1967
  • United States of America

As in past years, these institutes will offer the most knowledgeable panelists from the government, the judiciary and the private bar.  Attendees will include attorneys and accountants who are just beginning to practice in tax controversy and tax fraud defense, as well as those who are highly experienced practitioners.  The break-out sessions will encourage an open discussion of hot topics.  The program will provides valuable updates on new developments and strategies, along with the opportunity to meet colleagues, renew acquaintances and exchange ideas.

Department of State Releases October 2012 Visa Bulletin

The National Law Review recently published an article by Eleanor Pelta, Eric S. Bord, A. James Vázquez-Azpiri, Lance Director Nagel, Lisa H. Barton, and Malcolm K. Goeschl of Morgan, Lewis & Bockius LLP regarding the October 2012 Visa Bulletin:

 

EB-2 category for China and India is no longer unavailable; cutoff dates remain for Rest of the World EB-2 category.

The U.S. Department of State (DOS) has released its October 2012 Visa Bulletin. The Visa Bulletin sets out per country priority date cutoffs that regulate the flow of adjustment of status (AOS) and consular immigrant visa applications. Foreign nationals may file applications to adjust their status to that of permanent resident or to obtain approval of an immigrant visa application at a U.S. embassy or consulate abroad, provided that their priority dates are prior to the cutoff dates specified by the DOS.

What Does the October 2012 Visa Bulletin Say?

EB-1: All EB-1 categories remain current.

EB-2: A cutoff date of January 1, 2012, has been imposed for foreign nationals in the EB-2 category from all countries except China and India; a cutoff date of July 15, 2007, has been imposed for foreign nationals in the EB-2 category from China; a cutoff date of September 1, 2004, has been imposed for foreign nationals in the EB-2 category from India.

EB-3: There is continued backlog in the EB-3 category.

The relevant priority date cutoffs for foreign nationals in the EB-3 category are as follows:

China: February 8, 2006 (forward movement of 139 days)
India: October 15, 2002 (forward movement of 23 days)
Mexico: October 22, 2006 (forward movement of 92 days)
Philippines: August 1, 2006 (forward movement of 54 days)
Rest of the World: October 22, 2006 (forward movement of 92 days)

Developments Affecting the EB-2 Employment-Based Category

MEXICO, THE PHILIPPINES, AND THE REST OF THE WORLD

In July, for the first time in many years, the DOS imposed a cutoff date for individuals who qualify for the EB-2 category and are chargeable to a country other than China or India (Mexico, the Philippines, and the Rest of the World). Since July, the cutoff date for individuals from these countries had been January 1, 2009. The October Visa Bulletin announced that, as of October 1, 2012, the cutoff date will move forward to January 1, 2012. This means that, beginning on October 1, 2012, an individual chargeable to Mexico, the Philippines, or the Rest of the World with a priority date before January 1, 2012, may file an AOS application or an immigrant visa application. It is expected that the DOS will remove cutoff dates for these countries completely in November and that the EB-2 category will be “current” for individuals chargeable to these countries.

INDIA AND CHINA

The October Bulletin indicates a cutoff date of September 1, 2004, for EB-2 individuals chargeable to India and a cutoff date of July 15, 2007, for EB-2 individuals chargeable to China. The EB-2 category was previously unavailable to individuals chargeable to India or China. This means that EB-2 individuals chargeable to India or China with a priority date preceding these respective dates may file an AOS application or have the application approved on or after October 1 of this year. It appears that the U.S. Citizenship and Immigration Services has a large number of AOS applications for EB-2 Indian and Chinese nationals that have been “preadjudicated” and will be approved on October 1.

How This Affects You

Priority date cutoffs are assessed on a monthly basis by the DOS, based on anticipated demand. Cutoff dates can move forward or backward or remain static and unchanged. Employers and employees should take the immigrant visa backlogs into account in their long-term planning and take measures to mitigate their effects. To see the October 2012 Visa Bulletin in its entirety, please visit the DOS website here.

Copyright © 2012 by Morgan, Lewis & Bockius LLP

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