Cadwalader attorneys Jason Halper, Joseph Moreno and Joseph Facciponti were recently invited to speak to a group of law students at the University of Pennsylvania Law School about legal and regulatory challenges facing the growing financial technology (“Fintech”) industry. The students were all enrolled in a Fintech law seminar being taught by Professor Tom Baker.
“Fintech promises to revolutionize the way consumers and businesses engage in financial transactions,” said Halper, Co-Chair of the firm's Global Litigation Group. “Fintech firms include those that allow consumers to send money directly to each other, allow individuals and small businesses to obtain loans quickly, and allow small businesses to raise money from investors. As with all new technology, developers and entrepreneurs aren’t always aware of or sensitive to regulations that might apply to their businesses. And regulators themselves might struggle to find ways to adapt old regulations to new modes of doing business.”
The presentation primarily addressed cybersecurity and financial crime compliance for Fintech firms, focusing on the various regulatory regimes that might apply to the Fintech industry, the need for Fintech companies to adopt robust compliance programs to address cybersecurity and financial crime risk, and the potential penalties for not doing so.
Facciponti, a special counsel in the firm’s New York office, commented: “Fintech firms are tempting targets for cybercriminals who would look to steal their customer data, their valuable intellectual property, or both. At the same time, they face a host of competing cybersecurity regulatory regimes on both the state and federal level. Fintech firms would do well to adopt comprehensive cybersecurity risk management programs to protect themselves from cybercriminals and from regulatory enforcement actions.”
Added Moreno, a partner in Cadwalader's White Collar Defense and Investigations Group in Washington, DC, “While Fintech promises to make transferring funds convenient, fast, and inexpensive for most consumers, it is also attractive for the same reasons to money launderers, sanctions evaders, and those seeking to provide money to terrorist groups. Fintech companies should carefully consider their obligations under the Bank Secrecy Act and other laws, and ensure they adopt appropriate financial crime compliance programs – or potentially face harsh penalties or even criminal charges from regulators.”
Cadwalader actively serves clients involved in the Fintech sector throughout the full lifecycle --from establishing a more permanent asset-based, dilution-friendly capital structure to pursuing strategic financings and transactions to advising on regulatory compliance and litigation matters.
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