Financial Services Blog

Supreme Court of Kentucky Rules on Check Fraud Case Involving Articles 3 and 4 of the Uniform Commercial Code.

On June 19, 2014, the Supreme Court of Kentucky issued its decision regarding check fraud in the case of Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Company.  This is an important decision for Kentucky banks and employers who authorize employee signatories on company bank accounts. Read More ›

Witness Only Closings in West Virginia and Notary Fees: Is Your Bank at Risk for a Class Action Lawsuit?

In a class action lawsuit filed in West Virginia, the United States District Court for the Northern District of West Virginia recently held in Dijkstra v. Carenbauer et al (Civil Action No. 5:11-CV-152, Document Nos. 210 and 242) that the closing of real estate loans by non-lawyers constitutes the unauthorized practice of law. The Court held: Read More ›

Peeping Tom or Best Practice? Why Regular Employee Account Monitoring May Be Necessary

The news reports of bank losses serve as both cautionary tales and teaching moments: no bank wants to find its name included in headline-grabbing stories of bank employee misconduct.  Monitoring employee accounts for fraud and malfeasance is a regulatory expectation and a best practice for fraud prevention.  While regulators may not have specified particular types of monitoring requirements regarding employee accounts, it is evident that account monitoring parameters targeting high-risk employee transactions can have a greater chance of catching employee fraud than general non-risk based monitoring. Read More ›

OPT-IN OR OPT-OUT? PLAYING DEFENSE AGAINST INTERNET PAYMENT FRAUD

Financial institutions rejoiced last year at the victory won by BancorpSouth Bank in the case brought by its customer, Choice Land Title, LLC, alleging that the Bank must compensate it for $440,000 in fraud losses it suffered arising out of fraudulent wire transfer orders executed by the Bank. (Choice Land Title, LLC v. BancorpSouth Bank, 2013 WL1121339, W.D. Missouri, 2013).  The trial court recognized the validity of the financial institution’s defense that it had acted in accordance with commercially reasonable standards, and enforced the indemnification agreement between the customer and the Bank.  After being confronted with numerous cases finding in favor of the customers who had been the victims of payment fraud, financial institutions finally had a legal precedent for holding firm on refusing to reimburse customers who suffered payment fraud losses as a result of not following the security procedures offered by their financial institutions. Read More ›

New Kentucky Rules Regarding Slander of Title Claims and Lis Pendens Filings

The Supreme Court of Kentucky, on June 19, 2014, finalized its “to be published” decision in the case of Patricia W. Ballard v. 1400 Willow Council of Co-Owners, Inc.  Although this case arises from facts involving a condominium owner’s dispute with her building’s council of owners, the case is of interest to all financial institutions engaged in mortgage lending and real estate collections.  Read More ›

Forbearance Agreements With Any Relationship To Real Property

On March 4, 2014, the Ohio Supreme Court issued its decision in First Merit Bank v. Inks, 138 Ohio St.3d 384.  In this case, the court held that the statute of frauds prohibited both a claim and the assertion of a defense by guarantors who alleged an oral amendment of a written forbearance agreement.  That forbearance agreement came within the statute of frauds because in addition to settling the liability of the borrower and guarantors, it would have impacted the mortgage securing the debt – specifically by releasing that mortgage. Read More ›

Heartbleed in the Heartland for Community Banks

During the early stages of the Heartbleed computer bug panic, financial institutions and their customers were justly concerned about the vulnerability of their e-banking systems.  It now appears that the nation’s largest banks, including most regional banks, face little direct risk, and that many community banks continue to work with their technology vendors to determine whether their core platforms used the vulnerable version of Open SSL cryptography.  On the same day Heartbleed was “publically” announced, April 7th, the FDIC re-issued its guidance “Technology Outsourcing:  Informational Tools for Community Banks.” Read More ›

Kentucky Adopts Uniform Trust Code

On April 7, 2014, Governor Beshear signed into law HB 78, which caused Kentucky to join twenty-seven other states and the District of Columbia in the adoption of the Uniform Trust Code (the "UTC"). Kentucky's adoption of the UTC makes the rules related to trust administration more similar to those in surrounding states (e.g., Ohio, Tennessee, West Virginia and Indiana, which have adopted various portions of the UTC in recent years), and it represents a substantial change to the trust law in Kentucky. In general, the UTC, among other things, (i) contains specific in-court and out-of-court procedures for terminating/modifying outdated or inflexible irrevocable trusts, (ii) more specifically defines the respective rights and duties of trustees and beneficiaries, (iii) provides statutory authority for the principles of virtual representation, and (iv) provides an extensive list of definitions applicable to the new Chapter 386B of the Kentucky Revised Statutes. Read More ›

CONTRACTING WITH THIRD-PARTY VENDORS

An unheralded transformation is occurring in the business of banking. Banking is increasingly a business of outsourcing banking operations, as stretched financial institutions work to meet their customers and their regulators’ demands.  Skill in the procurement of third-party vendor services is now a core competency, and the regulatory agencies increasingly recognize it as such. In December of 2013, the Federal Reserve Board issued its updated “Guidance on Managing Outsourcing Risk.”  Read More ›

Social Media Pitfalls for Financial Services: The Latest Legal Guidance Every Bank Should Follow

Last year, the Federal Financial Institutions Examination Council (FFIEC) gift-wrapped an early Christmas present for its members, releasing its final guidance on the risks and legal pitfalls associated with banks, savings associations, credit unions, and nonbank entities engaging in social media.  The guidance does not create any new legal obligations for financial institutions, but assists in identifying the many compliance and legal risks associated with social media and the FFIEC expectations for managing those risks. Read More ›

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Attorney Spotlight

Jared M. Tully Jared Tully has extensive experience defending financial institutions in litigation involving claims of predatory lending and violation of the West Virginia Consumer Credit Protection Act and the Federal Fair Debt Collection Practices Act. Jared is also experienced in defending financial institutions in class action suits as well as defending insurance companies against claims of bad faith.

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