Practice Leader: Richard P. Eckman
Pepper Hamilton LLP’s Financial Services Practice Group includes more than 45 lawyers and other professionals who focus their practices on issues affecting the financial services industry. The financial services industry is changing rapidly. The expansion of financial institutions into new areas – securities, mutual funds, hedge funds and insurance – requires a group that has the breadth and depth to handle all these needs, needs met by the lawyers in Pepper’s Financial Services group.
For instance, for one of our major clients, we not only represent them in traditional lending and workouts matters, but also handle their substantial mutual fund complex and corporate trust transactions. This is just one example of the breadth and depth of our financial services practice.
Representing lenders in transactions is a significant part of our work. Frequently, we work with the agent bank in complex syndicated transactions, drafting the necessary documents and advising on the relationships of the agent to the participants, of the participants among themselves, and of the lending group to the borrower. Our group is experienced in financing transactions for asset and stock acquisitions, private equity investments, real estate acquisitions and development, construction loans, trade finance, asset-based lending (including equipment, inventory and receivables financing), as well as general working capital finance. Many of the transactions involve leveraged acquisitions, requiring sensitivity to creditors’ rights issues, and often involve several layers of financing. Due to our particular depth and experience in Delaware, Pennsylvania and New Jersey, we also often serve as local counsel for out-of-state lenders in preparing documents and providing opinions on matters of local law.
Transactions we handle may be secured by traditional or unusual collateral, running the gamut from intellectual property to interests in French venture capital funds. We have coordinated elaborate multi-state collateralization programs. Our lawyers are well versed in matters involving the Uniform Commercial Code and the Bankruptcy Code, as well as other bodies of applicable law.
Borrower Transactions and Legal Opinions
We represent corporate clients in their borrowings. This work involves substantial due diligence, negotiation of the complex underlying documentation with financial institutions, and the preparation and delivery of complex legal opinions. We also often act as local counsel for borrowers in providing opinions for multi-state transactions.
We represent clients in asset sales and securitization transactions, representing issuers of public and private debt securities, beneficial holders of such securities and trustees. We have advised on cash flows, mezzanine debt, and total return swap CLOs and CDOs, as well as traditional asset backed securities. These transactions and the related legal opinions often require advice on complex transaction structures, to make sure our clients meet the requirements of the law and the rating agencies involved in these transactions.
Bank Mergers and Corporate Transactions
We counsel our bank clients in hostile takeover attempts, auction processes for possible sales, and other corporate governance matters. We have represented bank holding companies and individual banks in acquisitions and mergers. In addition, we advise banks on anti-takeover and directors’ liability provisions in their articles and by-laws.
In these transactions, we work closely with the investment bankers and accountants involved, as well as with our lawyers in the tax, securities, employee benefits, labor, environmental and antitrust areas.
FRB, OCC, OTS, FDIC, FTC, FHFB, OFHEO, CRA, TILA, FCRA, GLBA, PATRIOT – the list of federal agencies, laws and regulations that govern banks and other financial institutions seems endless and ever-growing. Add the overlay of state regulation on many institutions, and the picture gets even more complex. We help commercial banks, bank holding companies, foreign banks, mortgage finance companies, and savings and loans to comply with all regulatory requirements. For example, we counsel on all aspects of the regulation of consumer finance, including deposits, residential mortgages, e-commerce/online banking issues, credit card and related service providers and processors, federal preemption questions, Community Reinvestment Act, fair lending and truth-in-lending matters, auto financing and leasing, tax refund anticipation and “pay day” loans, and other matters.
We represent clients in the regulatory aspects of bank mergers and other change-in-control transactions, as well as in officer investigation matters and enforcement actions by federal and state agencies. We also conduct audits of the forms and procedures used by lenders to assure their compliance with all applicable federal and state requirements, and represent troubled institutions in their relationships with their bank regulators.
Our Wilmington and Washington lawyers represent banks which have established Delaware subsidiaries to engage in credit card and other retail banking activities. These lawyers also have assisted credit card banks and retailers in connection with the purchase and sale of credit card portfolios.
Privacy, Security and Data Protection
Privacy and security of financial information is an increasingly important area of concern for financial institutions and the agencies that regulate them. We help financial institutions assess their responsibilities under the Gramm-Leach-Bliley Act, Fair Credit Reporting Act, Electronic Communications Act, CAN-SPAM Act, USA PATRIOT Act and other federal and state laws and regulations, and assist in drafting and implementing necessary plans, policies and procedures to protect sensitive information. We also help clients address ongoing compliance issues and breaches of privacy and security.
We represent financial institutions in public and private issuances of securities and related securities laws matters, including preparation of offering materials and registration statements in primary offerings, establishment of dividend reinvestment plans and stock option and stock purchase plans, and preparation and review of proxy materials.
Investment Management and Brokerage
This practice involves three general areas: representation of registered investment companies and registered investment advisers, representation of alternative investment funds (hedge funds, to most people) and investors in alternative products, and counseling regarding securities regulation, enforcement and litigation.
Our senior lawyers collectively have addressed all matters arising under the Investment Company Act of 1940 and the Investment Advisers Act of 1940. We counsel registered investment companies on the creation of new products and their marketing and distribution, corporate governance matters (including counseling fund boards of directors), obtaining exemptive, no-action and other relief from regulators, negotiating and structuring investments in financial instruments, mergers and acquisitions of funds and advisory firms, and a wide array of other matters. We assist investment advisers with registration issues, structuring new services, advisory contracts and other documents, regulatory compliance procedures and other issues. One of our partners is the former chair of the American Bar Association’s Tax Section’s Investment Companies Committee and is nationally recognized in the field of RIC taxation.
We also advise clients on the organization and operation of alternative investment funds such as private funds, offshore funds, hedge funds, funds of funds and other unregistered investment products. We counsel on organizing new funds, investment advisory agreements and other service provider agreements, investment transactions, compliance with ERISA and QPAM requirements, and regulatory compliance matters.
Compliance with securities laws and regulations is more important than ever. Pepper has developed compliance programs that can help clients avoid or mitigate regulatory actions including trading and operational conflicts of interest for investment firms that manage traditional and alternative investment strategies side-by-side. We also represent clients in federal, state or multi-jurisdictional investigations, and in actions by the FINRA.
Pepper lawyers represent de novo broker dealers through the formation and FINRA interview process. We also provide regulatory guidance with respect to ongoing operations of broker-dealers and legal assistance with the purchase, sale or merger of registered broker-dealers.
An increasingly important aspect of our practice involves representing financial services companies in all aspects of mortgage banking products and services. Our clients include some of the largest mortgage banking companies in the United States, offering products on a regional and national basis.
We help financial institutions and mortgage bankers comply with federal consumer credit protection statutes and related regulations such as the Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal Credit Opportunity Act, Home Mortgage Disclosure Act, Community Reinvestment Act, Fair Credit Reporting Act, etc., and with the statutes and regulations of all 50 states dealing with loans to consumers, and the licensing and regulation of lenders and servicers. We also advise financial institutions and mortgage bankers in areas of federal authority and preemption affecting their lending activities.
Such engagements involve new product design and implementation and the preparation of documentation, disclosures, and procedures for various types of mortgage products, ranging from traditional products such as standard adjustable rate mortgage loans and home equity lines of credit to innovative reverse annuity mortgage products and price-level adjustable mortgages.
Pepper handles a variety of secondary mortgage market issues, including those affecting mortgage loan origination and servicing operations, mortgage wholesale and correspondent arrangements, the purchase and sale of mortgages and mortgage servicing and subservicing rights, various aspects of the securitization of mortgage loans, and loan documentation, including state and federal disclosures.
Pepper is a nationally recognized, Red Book-listed bond counsel firm. We represent state and local governments and agencies as issuers of revenue bonds and general obligation bonds for financing the development, construction and operation of capital projects ranging from alleyways to zoos.
Pepper also acts as underwriter’s and special tax counsel for major investment banks in the underwriting of tax-exempt and taxable bonds, and serves municipalities as special counsel in administrative agency and appellate court proceedings. We also represent financial institutions as trustee’s counsel in revenue bond matters.
Our lawyers help clients secure federal, state and local governmental funding and credit support from government programs that promote or encourage economic development, energy development, infrastructure development or pollution abatement. We also help clients secure loans from investment and commercial banks and other sources.
We counsel derivatives providers and end-user firms on a wide array of derivatives transactions, including interest rate, foreign exchange, equity and credit-related derivatives transactions. This advice ranges from the corporate and regulatory aspects of structuring the derivatives operations and activities of the swap provider to the review and negotiation of all ISDA and other over-the-counter swap documentation. Recently, we:
- advised a national banking organization in connection with the establishment of its OTC derivatives and related hedging activities
- represented several regional and international banking organizations in connection with their customer derivatives activities
- represent numerous corporate, governmental and institutional clients in connection with various forms of interest rate and credit-related hedging activities.
Consumer Finance Litigation
We represent some of the largest consumer financial services companies in class action and individual lawsuits throughout the country alleging violations of the Equal Credit Opportunity Act, the Truth-in-Lending Act, the Fair Credit Reporting Act, the Fair Debt Collections Practices Act, Real Estate Settlement Practices Act, and other federal and state laws. We represent these same clients faced with inquiries and investigations by various state attorneys general. We defend claims under the federal statutes and regulations that govern consumer financial services and under state consumer finance laws including the Uniform Commercial Code, motor vehicle sales finance laws, and unfair and deceptive trade practices laws.
Workouts and Bankruptcy
We represent our financial services clients in their efforts to collect their loans in default and enforce their collateral security, as well as in their efforts to restructure and otherwise work their way out of problem credits. We often advise clients on lender liability issues and the sensitive judgments that must be made to avoid liability on the one hand and write-offs resulting from an overly cautious approach on the other. We have conducted non-bankruptcy asset liquidations on behalf of secured lenders in many states.
We represent lenders, owners, developers, equity syndicators and public agencies throughout the United States and its territories in financing of and investment in multi-family housing, and in the resolution of related regulatory issues. Our lawyers are experienced in all aspects of multi-family finance, including the use of tax credits, tax-exempt bonds, programs of Fannie Mae, Freddie Mac, FHA/HUD, Ginnie Mae and private conduits in mortgage securitization. We handle documentation and closing for financings nationwide, and advise clients regarding rights and remedies arising out of the origination, sale, pooling and servicing of mortgage loans secured by apartment and seniors projects.
Our lawyers have substantial experience in the combination of low income housing tax credits, public housing and HUD assisted financing and subsidy programs, including the structuring and documentation of ownership models for these projects. In addition, we are particularly skilled in Section 202 redevelopments, HUD Mark-to-Market restructurings, and Section 236 decouplings. We are often engaged to remove suspensions or debarments of program participants that result from mortgage defaults or operational difficulties, and to assist lenders in obtaining clearance for participation in HUD programs.
Pepper lawyers also have experience in general real estate matters, including commercial and residential mortgage loans, construction loans, bridge loans, real estate development, as well as title insurance and survey matters.