July 10, 2025
- Our first-half performance is on pace to surpass the firm’s record 2024
- We’re achieving great results for clients and adding exceptional legal talent
- Our culture of community, innovation and inclusivity is stronger than ever
With half of 2025 already in the books, I’m pleased to take this opportunity to thank all of our clients and friends for the opportunities that our firm has had to work together with you on important projects and matters. We greatly appreciate the trust that you put in us to help pursue important opportunities and overcome important challenges.
As America celebrated its 249th birthday last week, we at Cadwalader are in our 234th year of innovating and providing best-in-class services for clients. As Wall Street’s oldest law firm, Cadwalader has successfully navigated challenges across our profession and the world throughout our history. The current environment is no exception: law firms today face unprecedented challenges and unprecedented competition for clients and talent.
At Cadwalader, we’re incredibly fortunate to have had an outstanding first half of 2025, thanks to the trust our clients place in us and the commitment to excellence our people demonstrate every day.
Here are a few highlights.
Our First-Half Performance: We’re Busier Than Ever
As reported by the press in both the U.S. and UK, Cadwalader delivered a record performance in 2024. I’m excited to share that, through the first six months of 2025, we’re pacing ahead of that record performance. We’re busier than ever because you continue to entrust us with your most pressing, sophisticated transactional, litigation and regulatory matters.
As our Cabinet readers may know, Cadwalader’s regulatory group has been busy in 2025 supporting the cutting-edge securitization, structured product and fund finance matters our clients rely on us to execute. This includes ensuring compliance with state and federal banking laws, as well as keeping you up to date with hot issues like stablecoins and the GENIUS Act. In addition to the ever-increasing workload for transactional support, the group continues to advise on an array of bank regulatory issues including those related to our increasingly busy capital relief trade (CRT) practice.
Great Results Require Great Talent
The best measure of our first-half performance is the results we deliver for clients, including landmark deals and headline-grabbing cases over the past six months. Notably, we’ve advised on:
- An innovative CRT – the first public example of a securitization done on a single newly originated revolving CRE loan of $200 million. The transaction will help the bank reduce its risk-weighted assets, lower its construction and land development loan concentrations and diversify its balance sheet.
- The largest structured funding facility of its kind in the secondary market.
- The first publicly rated UK middle-market CLO, which is also the first reinvesting CLO in the European direct lending market.
- One of the biggest trade secret cases of recent note involving a ride-sharing giant’s alleged misappropriation of our client’s technology.
Our optimism is fueled by investing in exceptional lawyers to help our clients achieve their goals. Cadwalader continues to be a destination for the profession’s top talent during the first half of 2025 on both sides of the Atlantic:
- In the UK, we’ve welcomed Fund Finance partners Bron Jones, Doug Murning and Matt Worth; and Infrastructure Finance partner Rebecca Crowley.
- In the U.S., we proudly welcomed back two Cadwalader alumni to our partnership, including Dan Meade in Financial Regulation and Doug Mintz in Financial Restructuring.
Watch this space, as we plan to share more news about our growth in the months ahead.
We’re Empowering One Another and Our Communities
Supporting our people to deliver the best legal services means giving them an environment in which to grow, the tools to demonstrate agility and ingenuity, and the lessons in citizenship that define our culture and values. Some highlights since January include:
- Cadwalader was honored by the International Financial Law Review as the Career Development Law Firm of the Year at its annual awards dinner last month. This recognition reflects our robust Center for Career Advancement and our commitment to inclusivity, including the training and mentoring programs we provide our lawyers at every stage of their careers.
- We were also recognized by The American Lawyer for our 1792 Accelerator, a firm-wide innovation program driven by our lawyers. We continue to be among the profession’s leaders in using technology to increase efficiency, drive new business and develop proprietary products. Being named a finalist for the New York Legal Award for Innovation is something we’re all very proud of.
- Fighting hunger remains at the heart of Cadwalader’s long-standing tradition of serving the public good. During the first six months of the year, we led volunteer and philanthropic efforts in each of our communities, partnering with Food Bank Aid in London, Martha’s Table in Washington, D.C., A Roof Above in Charlotte, and Food Bank for New York City. Through our Justice Served campaign, which we founded 10 years ago, we mobilized more than 40 law firms and corporate legal departments to fund the delivery of 1 million meals to New Yorkers in need.
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None of what I’m sharing here would be possible without our clients. Our success happens because you trust us to guide you through both great opportunities and complex challenges.
As we enter the second half of 2025, our focus remains unchanged. We understand how your needs are evolving, and we’ll continue to grow Cadwalader to meet them. As we like to say, we’re not a firm that claims to do everything – but we are among the best at everything we do. That commitment to legal excellence and client service is the promise we make to each of you, and the standard by which we hold ourselves accountable.
On behalf of our partnership and firm, thank you for your friendship, your support and the opportunities to accomplish great things together. I wish you a fantastic summer and look forward to keeping in touch.
Pat
On June 27, the Federal Reserve Board issued the aggregate and individual results of the supervisory stress test (also known as the Dodd-Frank Act Stress Test or DFAST, as these tests are required by Section 165 of the Dodd-Frank Act), which assesses whether banks are sufficiently capitalized to absorb losses during a severe recession.
The Federal Reserve stated that all 22 banks tested remained above their minimum CET1 capital requirements during the stress scenario, after absorbing total projected hypothetical losses of more than $550 billion.
Most banks announced their estimated stress capital buffer (“SCB”) requirements under the Comprehensive Capital Analysis and Review (“CCAR”). The Federal Reserve is likely to publish all applicable banking organizations’ official SCBs by August 31. The SCB is driven by the DFAST results and is calculated by adding the maximum decline in each banking organization’s common equity tier 1 (“CET1”) ratio under the DFAST’s severely adverse scenario plus four quarters of planned dividends. The minimum SCB is 2.5%. This is added to the 4.5% capital regulation minimum and any G-SIB surcharge or countercyclical capital buffer in place to show the total CET1 required. Many banks saw their SCBs reduced this year compared to 2024 results, some saw no change (generally those already at the 2.5% minimum), and one bank saw an increase.
The Bank Policy Institute (“BPI”), a leading trade association for large banks, released a statement regarding the release of the stress results. BPI noted that the results show large banks’ resilience and stated, “Today’s stress test results reaffirm the strength of the nation’s largest banks, but they also serve as an annual reminder of persistent flaws in the framework. Banks continue to hold excess capital not because of risk, but to hedge against uncertainty and year-to-year volatility in the Fed’s modeled results, now openly acknowledged by the Fed.” BPI continued, “By this time next year, we are optimistic the Federal Reserve will have instituted a stress testing framework that is transparent, subject to public comment, consistent with the law and, therefore, a more accurate and less volatile assessment of banks’ capital needs under stress.”
The last sentence in the BPI statement is in reference to the FRB’s proposal to change the calculation of the SCB to reduce the volatility of the SCB by, among other things, averaging the declines projected in the stress test with the prior two years’ stress test results.
On June 25, 2025, FinCEN announced its first orders under the 2024 FEND Off Fentanyl Act, finding that three Mexican financial institutions—CIBanco S.A. Institución De Banca Multiple (“CIBanco"), Intercam Banco S.A., Institución de Banca Multiple (“Intercam”), and Vector Casa de Bolsa, S.A. de C.V (“Vector”) (collectively, the “Designated FIs”)—are of “primary money laundering concern in connection with illicit opioid trafficking.” Effective beginning September 4, 2025, U.S. financial institutions are prohibited from engaging in any transmittal of funds from or to the Designated FIs.
The FEND Off Fentanyl Act
In April 2024, Congress passed the FEND Off Fentanyl Act (“FOFA”), establishing a national policy “to apply economic and other financial sanctions to those who engage in the international trafficking of fentanyl, fentanyl precursors, or other related opioids.”[1] FOFA amended the Fentanyl Sanctions Act to grant the Secretary of the Treasury power to impose restrictions relating to non-U.S. financial institutions that are of “primary money laundering concern in connection with illicit opioid trafficking.”[2] Available restrictions include six special measures: the five USA PATRIOT Act Section 311 special measures, including record-keeping obligations, reporting requirements, and prohibitions on maintaining correspondent accounts, and a sixth special measure added by FOFA, which allows the Secretary of the Treasury to “prohibit, or impose conditions upon, certain transmittals of funds.”[3]
Requirements Under the Orders
Each of the three orders prohibits covered financial institutions from engaging in any transmittal of funds from or to any of the Designated FIs.[4] The term “covered financial institution” includes U.S. banks, broker-dealers, money services businesses, and other financial institutions.[5]
Each Designated FI is defined to include its branches, subsidiaries, and offices located in Mexico. Any branches, subsidiaries, or offices operating outside of Mexico are expressly excluded from the definition of each Designated FI.
Unlike OFAC sanctions, which generally prohibit all dealings with a sanctions target, the FinCEN orders prohibit only the “transmittal of funds,” which is defined as the sending and receiving of funds, including convertible virtual currency. Beginning on the effective date, the orders require covered financial institutions to reject any prohibited transmittal of funds; the orders do not require any blocking, freezing, or reporting.
The penalties for engaging in a prohibited transmittal of funds include criminal fines of up to $1,000,000 per violation, and civil money penalties of up to $1,776,364 per violation.
FinCEN’s orders initially were to become effective on July 21, 2025. However, on July 9, 2025, FinCEN extended the effectiveness date of the orders to September 4, 2025. The orders have no cessation date.
Compliance Considerations
To ensure compliance with the orders, U.S. financial institutions may wish to consider several measures:
- Evaluate exposure to the Designated FIs to identify and manage related risk.
- Review agreements that involve any of the Designated FIs, whether directly or indirectly, to understand any legal, contractual, or operational implications.
- Ensure that compliance processes are calibrated to manage the risks that FinCEN’s use of its new authority presents.
Notably, the FinCEN orders find that the Designated FIs have facilitated opioid-related money laundering for cartels that OFAC has sanctioned and that the Department of State has designated as foreign terrorist organizations. Although transmittals of funds with the Designated FIs remain permissible until September 4, 2025, financial institutions and non-financial institutions alike may wish to conduct additional diligence on any transactions involving the Designated FIs.
Looking Ahead
Mexico’s bank regulator has intervened in response to FinCEN’s orders, including by appointing representatives to key management functions at the Designated FIs, and by reviewing the AML/CFT certification of the compliance officers of the Designated FIs.[6] FinCEN cited these measures by the Government of Mexico as a reason for extending the orders’ effectiveness date to September 4, 2025; it remains to be seen whether additional measures by the Government of Mexico will cause FinCEN to change the effectiveness date again, or otherwise alter or withdraw the orders.
Separately, Mexico’s Ministry of Finance and Public Credit has announced a plan to spin off the trust businesses of CIBanco and Intercam to ensure the “operational continuity of the trusts they currently manage.”[7] No timing for such a spin-off has been announced, but if implemented, the plan may remove CIBanco and Intercam as trustees of trusts with which U.S. financial institutions deal, allowing transmittals of funds involving those trusts to continue.
[1] Pub. L. No. 118-50, § 3101(b), 138 Stat. 936.
[2] 21 U.S.C. § 2313a(a).
[3] 31 U.S.C. § 5318A(b)(1)–(5); 21 U.S.C. § 2313a(a)(2).
[4] 90 Fed. Reg. 27764 (Jun. 30, 2025) (Vector); 90 Fed. Reg. 27770 (Jun. 30, 2025) (CIBanco); 90 Fed. Reg. 27777 (Jun. 30, 2025) (Intercam).
[5] Id., 31 C.F.R. § 1010.100(t).
[6] FinCEN, Frequently Asked Questions, at 5-6 (Jul. 9, 2025), https://www.fincen.gov/sites/default/files/shared/Final-FAQs.pdf; Comisión Nacional Bancaria y de Valores, Comunicado Conjunto, Junta de Gobierno de la CNBV decretó la intervención gerencial temporal de CI Banco, S.A. e Intercam Banco, S.A., (Jun. 26, 2025), https://www.gob.mx/cnbv/prensa/comunicado-conjunto-junta-de-gobierno-de-la-cnbv-decreto-la-intervencion-gerencial-temporal-de-ci-banco-s-a-e-intercam-banco-s-a
[7] Secretaría de Hacienda y Crédito Público, Comunicado No. 28 (Jul. 4, 2025), https://www.gob.mx/shcp/prensa/comunicado-no-28-hacienda-anuncia-escision-y-proceso-de-transferencia-temporal-del-negocio-fiduciario-de-instituciones-de-credito-en-administracion-cautelar-a-la-banca-de-desarrollo-mexicana
Cadwalader partners Peter Malyshev, Mercedes Tunstall and Daniel Meade authored a recent Bloomberg Law article examining how the mainstreaming of commodity trading by retail investors is pushing regulators and Congress to modernize oversight.
They note that while Congress is taking steps to regulate stablecoins, broader updates to the Commodity Exchange Act may be needed as the definition of “commodity” continues to expand—now including digital assets, event outcomes and more.
The article also highlights the increasing role of non-professional traders and the push for new market structures, including self-liquidating accounts and 24/7 trading. As tokenized assets proliferate and decentralized platforms gain traction, the CFTC and SEC will likely face mounting calls for clarity and coordination.
Read the full article here (subscription required).