Articles Posted in Banking

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The Second Circuit affirmed the district court's denial of a judgment creditor's request for attachment and turnover of blocked electronic funds transfers (ETF) under Section 201 of the Terrorism Risk Insurance Act. In Calderon-Cardona v. Bank of N.Y. Mellon, 770 F.3d 993 (2d Cir. 2014), and Hausler v. JP Morgan Chase Bank, N.A., 770 F.3d 207 (2d Cir. 2014) (per curiam), the court held that blocked wire transfers held at an intermediary bank are subject to execution under Section 201(a) only if the judgment debtor or an agency or instrumentality of the judgment debtor "transmitted the EFT directly to the bank where the EFT is held pursuant to the block." In this case, the court held that neither Grand Stores nor Tajco had any attachable property interest in the blocked funds at JPMorgan since they were not the entities that directly passed the EFTs to JPMorgan. Therefore, the district court correctly concluded that the blocked funds were not attachable under Section 201(a). View "Doe v. JPMorgan Chase Bank, N.A." on Justia Law

Posted in: Banking

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NCUA, an independent federal agency responsible for regulating and insuring federal credit unions, liquidated five corporate credit unions and succeeded to ownership of their assets, including residential mortgage-backed securities trusts (RMBS Trusts). NCUA subsequently brought common law and statutory claims against the trustees of the RMBS Trusts. The district court twice dismissed the derivative claims and subsequently denied NCUA's motion for leave to supplement its Second Amended Complaint (SAC). The Second Circuit followed the plain language of the contracts under which NCUA transferred the RMBS Trust certificates, and held that the district court correctly found that NCUA lacked derivative standing to bring claims based on those certificates. The court also held that the district court did not abuse its discretion when it denied NCUA's motion for leave to supplement. Accordingly, the court affirmed the judgment. View "National Credit Union Administration Board v. US Bank National Association" on Justia Law

Posted in: Banking

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Because existing New York law does not clearly settle whether claims for interest on principal continue to accrue after a claim for the principal itself is time‐barred, the Second Circuit certified questions pertaining to that issue to the New York Court of Appeals: 1. If a bond issuer remains obligated to make biannual interest payments until the principal is paid, including after the date of maturity, see NML Capital v. Republic of Argentina, 17 N.Y.3d 250, 928 N.Y.S.2d 666 (2011), do enforceable claims for such biannual interest continue to accrue after a claim for the principal of the bonds is time‐barred? 2. If the answer to the first question is "yes," can interest claims arise ad infinitum as long as the principal remains unpaid, or are there limiting principles that apply? View "Ajdler v. Province of Mendoza" on Justia Law

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Schwab filed suit seeking to recover for harm allegedly resulting from a conspiracy among major banks to manipulate the London Interbank Offered Rate (LIBOR). The district court dismissed Schwab's state law claims for lack of personal jurisdiction, and dismissed both federal and certain state-law claims for failure to state a claim. The Second Circuit vacated portions of the district court's judgment that dismissed Schwab's state-law claims concerning products sold in California for lack of personal jurisdiction; dismissed Schwab's Securities Exchange Act claims premised on misrepresentations and omissions that induced the purchase of floating-rate instruments on or after April 27, 2008; and dismissed Schwab's unjust enrichment claims against counterparties or a wrongdoer's affiliates as time-barred. The court affirmed in all other respects, remanding for further proceedings. View "Charles Schwab Corp. v. Bank of America Corp." on Justia Law

Posted in: Banking

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Judgment creditors of the Islamic Republic of Iran and Iran's Ministry of Intelligence and Security sought to enforce underlying judgments obtaining the turnover of $1.68 billion in bond proceeds allegedly owned by Bank Markazi. The Second Circuit held that the settlement agreements released plaintiffs' non-turnover claims with respect to some but not all of the banks; the assets at issue were in fact located abroad, but that those assets may nonetheless be subject to turnover under state law pursuant to an exercise of the court's in personam jurisdiction, inasmuch as the district court has the authority under New York State law to direct a non‐sovereign in possession of a foreign sovereignʹs extraterritorial assets to bring those assets to New York State; and those assets will not ultimately be subject to turnover, however, unless the district court concludes on remand that such in personam jurisdiction exists and the assets, were they to be recalled, would not be protected from turnover by execution immunity. Accordingly, the court affirmed in part, vacated in part, and remanded for further proceedings. View "Peterson v. Islamic Republic of Iran" on Justia Law

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FHFA, as conservator for government-sponsored enterprises (GSEs), filed suit against defendants, alleging violations of the Securities Act of 1933 and analogous "Blue Sky laws," the Virginia Securities Act, and the D.C. Securities Act. The FHFA alleged that representations regarding underwriting criteria for certificates tied to private-label securitizations (PLLs) was a material misstatement. The district court rendered judgment in favor of the FHFA under Sections 12(a)(2) and 15 of the Securities Act, and analogous provisions of the Virginia and D.C. Blue Sky laws. The district court also awarded rescission and ordered defendants to refund the FHFA a total adjusted purchase price of approximately $806 million in exchange for the certificates. The Second Circuit found no merit in defendants' argument and held that defendants failed to discharge their duty under the Securities Act to disclose fully and fairly all of the information necessary for investors to make an informed decision whether to purchase the certificates at issue. Accordingly, the court affirmed the judgment. View "Federal Housing Finance Agency v. Nomura Holding America, Inc." on Justia Law

Posted in: Banking, Securities Law

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HSBC and the government appealed the district court's grant of a motion by a member of the public to unseal the Monitor's Report in a case involving a deferred prosecution agreement (DPA) with HSBC. The Second Circuit held that the Monitor's Report is not a judicial document because it is not relevant to the performance of the judicial function. By sua sponte invoking its supervisory power at the outset of this case to oversee the government's entry into and implementation of the DPA, the court explained that the district court impermissibly encroached on the Executive's constitutional mandate to "take Care that the Laws be faithfully executed." Furthermore, even assuming arguendo that a district court could revoke a speedy trial waiver were it to later come to question the bona fides of a DPA, the presumption of regularity precludes a district court from engaging in the sort of proactive and preemptive monitoring of the prosecution undertaken here. View "United States v. HSBC Bank USA, N.A." on Justia Law

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A group of hotel-related businesses, as well as investors and guarantors, filed suit alleging claims of fraud against the Royal Bank and two of its subsidiaries. The district court dismissed the claims because plaintiffs had failed to list their cause of action in a schedule of assets in their now-concluded bankruptcy proceeding, they lacked standing to bring the claim, and were barred by judicial estoppel. The claims of the investor and guarantors were dismissed as untimely and barred by the law of the case. The Second Circuit affirmed on the grounds of judicial estoppel and timeliness. The court held that, under Fifth Circuit law, the kind of LIBOR-fraud claim that BPP wanted to assert was "a known cause of action" at the time of confirmation, so that BPP's failure to list it in the schedule of assets was equivalent to a representation that none existed; the bankruptcy court "adopted" BPP's position; and BPP's assertion of the claims now would allow it to enjoy an unfair advantage at the expense of its former creditors. Furthermore, plaintiffs have not shown good cause for an untimely amendment, and the district court properly denied leave to amend. View "BPP Illinois v. Royal Bank of Scotland Group PLC" on Justia Law

Posted in: Banking, Bankruptcy

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Plaintiff, individually and on behalf of others similarly situated, filed suit against defendant, alleging violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq. Plaintiff alleged that defendant failed to provide the "amount of the debt" within five days after an initial communication with a consumer in connection with the collection of a debt, as required by section 1692g. The court declined to hold that a mortgage foreclosure complaint was an initial communication with a consumer in connection with the collection debt. In this case, the court concluded that neither the Foreclosure Complaint nor the July Letter were initial communications giving rise to the requirements of section 1692g(a). The court held, however, that the August Letter was an initial communication in connection with the collection of a debt, and that the Payoff Statement attached to the August Letter did not adequately state the amount of the debt. The Payoff Statement included a "Total Amount Due," but that amount may have included unspecified "fees, costs, additional payments, and/or escrow disbursements" that were not yet due at the time the statement was issued. The court explained that a statement was incomplete where, as here, it omits information allowing the least sophisticated consumer to determine the minimum amount she owes at the time of the notice, what she will need to pay to resolve the debt at any given moment in the future, and an explanation of any fees and interest that will cause the balance to increase. Accordingly, the court vacated and remanded for further proceedings. View "Carlin v. Davidson Fink LLP" on Justia Law

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Plaintiff filed a putative class action against Comenity to recover statutory damages for violations of the Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. The district court concluded that plaintiff failed, as a matter of law, to demonstrate that four billing-rights disclosures made to her by Comenity in connection with plaintiff's opening of a credit card account violated the TILA. The court concluded that plaintiff failed to demonstrate the concrete injury required for standing to pursue two of her disclosure challenges and thus dismissed those two claims for lack of jurisdiction. The court concluded that, although plaintiff established standing to pursue the two remaining claims, those challenges fail as a matter of law. In this case, Comenity’s notice that certain TILA protections applied only to unsatisfactory credit card purchases that were not paid in full is substantially similar to Model Form G–3(A) and, therefore, cannot as a matter of law demonstrate a violation of 15 U.S.C. 1637(a)(7). Furthermore, because neither the TILA nor its implementing regulations require unsatisfactory purchases to be reported in writing, Comenity’s alleged failure to disclose such a requirement cannot support a section 1637(a)(7) claim. Accordingly, the court affirmed the district court's grant of summary judgment to Comenity on those TILA claims. The court also affirmed the district court's denial of her cross-motion for class certification as moot. View "Strubel v. Comenity Bank" on Justia Law

Posted in: Banking, Consumer Law