Author Archive

Risk-Weight of Cybersecurity

Author: admin

In recent remarks before the New England Council, Comptroller of Currency, Thomas J. Curry, said that cyber security for banks is no longer merely an issue for IT. Rather, it is the “foremost risk facing banks today.” The infamous breach at the Office of Personnel Management earlier this year alerted every organization with sensitive information to the high risk of a similar attack. As a result, banks are experiencing more severe scrutiny with regard to cybersecurity–not just from the IT world, but also from regulators. Regulators’ concerns are not limited to “whether a bank has appropriate safeguards against a cyber attack,” says Stan Orzula, “but also whether the bank is properly managing its vendors and maintaining adequate insurance coverage, as well as, most importantly, whether the board and senior management are embedding cybersecurity into the bank’s culture and compliance systems.”

By: Alexia Boggs

In the age of the smartphone and the rise of Millennials as the banking industry’s newest customer base, a more tech-centered approach is to be expected from banks. However, Millennials may be demanding changes in banking faster than the banks can keep up: the recent “decline (in branches) pales in comparison to the technological change in banking and payment processing and raises the question of whether or not banks are transforming their delivery systems fast enough to accommodate changing client needs.” One change will be how banks use the branches they decide to keep around, which “likely will be more for sales than actual customer transactions.” Because the new bank customer base is turning to a smartphone app for customer service, rather than the teller at a bank branch, banks should focus on developing easy-to-use apps that offer anything their branches would offer, and more. For banks that fail to do so, Millennials may conclude that the bank simply does not offer services that are missing in its app.

By: Alexia Boggs

In October, the Securities Exchange Commission adopted rules to govern the most controversial section of the 2012 Jumpstart Our Business Start-Ups Act (JOBS Act). Starting as early as January, investors will be able to begin investing up to $5000 (or as much as 10% of one’s annual income, maxing out at $100,000) on an annual basis in firms marketing and issuing equity via online platforms similar to Kickstarter and Indiegogo. The SEC had adopted rules for other sections of the JOBS Act in the past several years, but the threshold auditing requirements for companies issuing equity under these rules were still difficult to overcome for most start-ups. These new rules adopted also reduce the barrier to entry for would-be investors; no longer do investors need a certain level of income or assets to be able to browse and purchase non-publicly traded securities marketed online.

By: Spencer Durden

Although banks in the US are reporting strong balance sheets, many are downsizing their retail-banking operations. Goldman Sachs has shuttered 142 branches and Bank of America has closed over 200. Retail banking branches cover consumer financial products like residential mortgages and loans for small businesses. These closures are being caused by a combination of decreased consumer demand for these financial products and the lingering effect of low interest rates on these mortgages and loans. The profits attributable to the interest earned on these retail-banking operations, once “core revenues,” have been diminished under the current, near-zero level interest rates and now even the largest banks are feeling this strain.

By: Spencer Durden

The decision from O’Bannon v. NCAA, in which collegiate athletes were seeking compensation after the NCAA allowed video game developers to use collegiate athletes’ names, images, and likenesses without the athletes’ consent, marks the first time a Federal Court of Appeals has upheld a trial court’s ruling finding that NCAA compensation rules violate antitrust law for being an unlawful restraint on trade.  However, the Court of Appeals reversed the damages awarded by the trial court, finding that full-cost-of-attendance scholarships constituted adequate compensation for the use of the collegiate athletes’ NILs in video games.  For now the O’Bannon decision protects the NCAA’s model of amateurism, but an upcoming case, Jenkins v. NCAA, led by Jeffery Kessler, a well known sports-law and antitrust lawyer, is seeking to abolish the NCAA compensation laws altogether.

By: Greg Sechrist

General Electric’s CEO, Jeffery Immelt, has halted plans to build a nuclear power plant in India due to an Indian law that could allow for suppliers to be held liable for nuclear accidents. Immelt is taking the stance that the law in India should be consistent with the global approach. The law is dampening the efforts of the Indian Prime Minister Narendra Modi’s pledge to raise India’s nuclear generation capability in order to lower greenhouse gas emissions and expand the availability of household electricity. Immelt indicated that General Electric saw a long-term opportunity to address India power shortage but despite the nuclear liability law, will continue to expand aviation, oil and gas business in the country.

By: Matt Fennell