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Financial Services & E-Commerce

The Department of Labor’s Fiduciary Rulemaking: Impacts, Implications and Related Policy Issues

Financial Services & E-Commerce Practice Group Teleforum Monday, May 09, 12:00 PMFederalist Society Teleforum Conference Call

On April 6, 2016, the Department of Labor released its much-anticipated “fiduciary” rulemaking, which will greatly expand the universe of entities and persons who will be deemed fiduciaries in respect of retirement plans and accounts. The rulemaking has garnered significant interest from members of Congress, federal and state regulators, FINRA, the financial services industry and investor advocates, among others. Our experts will discuss the new rules, and their history and purpose. They will also explore several of the key policy issues and controversies associated with the rulemaking.

Featuring:

  • Jeffrey T. Dinwoodie, Associate, Davis Polk & Wardwell LLP
  • Hon. Annette L. Nazareth, Partner, Davis Polk & Wardwell LLP

Is the Administrative State Too Big to Fail?: MetLife v. Financial Stability Oversight Council - Podcast

Financial Services & E-Commerce Practice Group Podcast
Peter J. Wallison April 26, 2016

On March 30, Federal district court Judge Rosemary Collyer struck down the Financial Stability Oversight Council’s designation of MetLife as a systemically important financial institution. MetLife v. Financial Stability Oversight Council has readily apparent implications for financial regulation, and many commentators have suggested that it may even have far-reaching effects on the future of the larger administrative state. Our expert discussed the opinion, its outlook on appeal, and its possible impact.

Featuring:

  • Hon. Peter J. Wallison, Arthur F. Burns Fellow in Financial Policy Studies, American Enterprise Institute

The Alt-Chain Revolution: Regulatory Considerations for the Next Wave of Bitcoin Innovation - Podcast

Financial Services & E-Commerce Practice Group Podcast
Andrew Grossman, David B. Rivkin, Jr. April 25, 2016

Bitcoin is dead. Long live Bitcoin. A counterintuitive feature of the groundbreaking cryptocurrency—and there are many—is that both statements may simultaneously be true. The Bitcoin economy is robust and growing, with access to Bitcoin-denominated services expanding and more and more startups and established businesses seeking to capitalize on its popularity. At the same time, the Bitcoin network—literally, the interconnected web of computers that records transactions in Bitcoin’s distributed ledger known as the “blockchain”—is showing the strain of the currency’s success, while disagreements threaten to stymie efforts to expand Bitcoin usage further.

But even as political disputes threaten disruption of the core Bitcoin blockchain, developers are beginning to introduce a new wave of innovation that has the potential to replace political stalemate with market competition. Alternative blockchains, or “alt-chains,” act as replacements for the Bitcoin network and blockchain that facilitate Bitcoin-based transactions off the core blockchain—in the same way that stocks can be traded on a myriad of competing electric trading networks, apart from primary exchanges like NYSE and NASDAQ. Alt-chains and related technologies may be central to preserving Bitcoin’s key speed and cost advantages over traditional financial networks in the years ahead.

As in many innovative fields, some of the greatest barriers to alt-chain success are legal and regulatory uncertainty, far more than technological issues. In a recent Federalist Society White Paper, David Rivkin and Andrew Grossman attempt to resolve some of this uncertainty by cataloguing the diversity of potential applications for blockchain alternatives and addressing the issues raised by alt-chains and other blockchain supplements and replacements under federal and state law. They discussed their paper with Federalist Society members on a Teleforum conference call.

Featuring:

  • Andrew M. Grossman, Partner, Baker & Hostetler LLP and Adjunct Scholar, The Cato Institute
  • David B. Rivkin, Jr., Partner, Baker & Hostetler LLP

Puerto Rico v. Franklin California Tax-Free Trust - Post-Argument SCOTUScast

SCOTUScast 3-28-16 featuring David Skeel
David Skeel March 28, 2016

On March 22, 2016, the Supreme Court heard oral argument in Puerto Rico v. Franklin California Tax-Free Trust (consolidated with its companion case, Acosta-Febo v. Franklin California Tax-Free Trust).

Concerned that its public utilities were on the verge of insolvency but could not obtain Chapter 9 bankruptcy relief under federal law, the Commonwealth of Puerto Rico attempted to circumvent this obstacle by passing its own municipal bankruptcy law. This law, the Puerto Rico Public Corporation Debt Enforcement and Recovery Act expressly provides different protections for creditors than those in federal Chapter 9. 

Investors who collectively hold nearly two billion dollars in bonds issued by one of Puerto Rico’s public utilities worried that it might seek relief under the new Puerto Rico law and sued in federal court, challenging the law’s validity and seeking injunctive relief. The district court enjoined the enforcement of the new law and the U.S. Court of Appeals for the First Circuit affirmed.  Puerto Rico sought certiorari.

The question before the Supreme Court is whether Chapter 9 of the federal Bankruptcy Code, although it does not apply to Puerto Rico, nevertheless preempts the Puerto Rico statute creating a mechanism for the Commonwealth’s public utilities to restructure their debts. Justice Alito is recused from this case.

To discuss the case, we have David Skeel, who is the S. Samuel Arsht Professor of Corporate Law at the University of Pennsylvania Law School, and who submitted an amicus brief in support of the Commonwealth of Puerto Rico.

Husky International Electronics, Inc. v. Ritz - Post-Argument SCOTUScast

SCOTUScast 3-7-16 featuring Zvi Rosen
Zvi Rosen March 07, 2016

On March 1, 2016, the Supreme Court heard oral argument in Husky International Electronics, Inc. v. Ritz.  Between 2003 and 2007 Husky International Electronics sold and delivered electronic device components worth more than $160,000 to Chrysalis Manufacturing Corp.  Chrysalis, then under the financial control of Daniel Ritz, failed to pay for the goods and Ritz encouraged the transfer of funds from Chrysalis to various other companies.  Ritz held substantial ownership stakes in these companies, which had not given reasonably equivalent value in exchange for the Chrysalis funds.

In May 2009, Husky sued Ritz in federal district court, seeking to hold him personally liable for Chrysalis’s debt. Ritz filed a voluntary Chapter 7 bankruptcy petition, and Husky then filed a complaint in the bankruptcy court alleging actual fraud, to preclude a discharge of Ritz’s debts. The bankruptcy court ruled that Husky had failed to prove actual fraud, however, and the district court affirmed that decision.  The U.S. Court of Appeals for the Fifth Circuit likewise affirmed the lower court judgments, finding no record evidence of a false representation by the debtor, which the Fifth Circuit deemed a necessary predicate to establish actual fraud.

The question now before the Supreme Court is whether the “actual fraud” bar to discharge under Section 523(a)(2)(A) of the Bankruptcy Code applies only when the debtor has made a false representation, or whether the bar also applies when the debtor has deliberately obtained money through a fraudulent-transfer scheme that was actually intended to cheat a creditor.

To discuss the case, we have Zvi Rosen, who is a visiting scholar at Hofstra University Maurice A. Deane School of Law.