The Security and Exchange Act of 1934 criminalizes “willful” violations of its provisions and certain SEC rules or regulations.  While in some other contexts the term “willful” signals a requirement that the defendant “knowingly” violated federal law, several U.S. Courts of Appeal, including the Second and Ninth Circuits, have held that the government need only show that the defendant “intended to commit an act prohibited under the statute.”  The Second Circuit reiterated this position as recently as July 1, 2010, when it upheld the trial court’s jury instruction defining the term “willful” under the Act with reference only to the defendant’s “intent to cause a deception, a falsification,” rather than requiring any knowledge of illegality.  United States v. Kaiser, 609 F.3d 556, 567-68 (2nd Cir. 2010) (reversing conviction on other grounds).  The Court reached this interpretation due in large part to the Act’s “unique statutory language,” which criminalizes willful violations, but shields defendants who violate a rule or regulation without knowledge of its existence from imprisonment.  The Second Circuit had previously suggested that this safe harbor provision would be meaningless if the threshold for criminal liability in the first place was knowledge of illegality.  United States v. Dixon, 536 F.2d 1388, 1396 (2nd. Cir. 1976).  In other words, a person can “willfully” violate an SEC rule even if he does not know of the existence of the rule. 

While Courts in other jurisdictions have yet to definitively interpret the “willful” requirement of the Act’s penalty provision, a number of decisions indicate that judges within those circuits may likely lean in the Second Circuit’s direction.  The Fourth Circuit, for example, upheld a securities fraud conviction focused on the defendant’s intent to manipulate and deceive, making no indication that it required a knowing violation of the Act.  See Bryan v. United States, 58 F.3d 933 (4th Cir. 1995).  In United States. v. Johnson, 553 F. Supp. 2d 582 (E.D. Va. 2008), the District Court likewise focused on the defendant’s act of designing a scheme to defraud investors with no reference to his knowledge of securities laws.

With prior cases from Courts like the Fourth Circuit focusing on the defendant’s intent to commit wrongful acts, and the Second Circuit’s interpretation of the Securities and Exchange Act’s penalty provision, companies and individuals would do well to err on the side of caution and treat the Second Circuit’s view of the Act as prevailing law in any circuit that has not explicitly held otherwise.  Despite the “willful” requirement under the Act, if an incident occurs that could give rise to an enforcement action, asserting lack of knowledge of securities laws and regulations is unlikely to make the government go away.  Given the recent tenacity with which the Commission has pursued such actions, and its new ability to effectively provide bounties for a whistleblower’s information on criminal violations, companies’ and individuals’ potential exposure in this context will likely only increase in the future.

The bounty program was authorized in a little-noticed provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, passed by Congress and signed into law by President Obama in July. Unlike much of the Dodd-Frank Act, this provision affects all companies subject to federal securities laws, not just companies in the financial services industry.

Section 922 of the Dodd-Frank Act added a new section 21F to the Securities Exchange Act of 1934 which provides that the SEC must pay rewards to whistleblowers who provide original information about violations of the federal securities laws that leads to successful enforcement actions resulting in more than $1 million in penalties. Awards, ranging between 10 and 30 percent of collected penalties, are to be paid from an Investor Protection Fund for which almost $452 million has already been budgeted. The Dodd-Frank Act also prohibits retaliation against informants in the SEC program and provides for redress in the federal courts. On November 3,  the SEC approved a 181-page Notice describing, and seeking public comment until December 17 on,  the agency’s proposed rules for implementing the whistleblower program authorized by the legislation.  See www.sec.gov/news/press/2010/2010-213.htm.  Under the Dodd-Frank Act, the SEC has until April 17, 2011, to adopt final rules.

Implications

All publicly-held companies now face new risks that their employees will bypass their companies’ own internal compliance programs and go directly to the SEC in hope of winning huge Dodd-Frank awards (or, in some cases, seeking protection under Dodd-Frank’s anti-retaliation provisions from discharge for their own work-related problems). The result could well diminish the effectiveness of the internal programs and leave companies facing the burden of defending against claims – many of which may be spurious – taken to the SEC that become the basis of investigations by the agency. The risks are exacerbated by the fact that members of the plaintiffs’ bar already have launched aggressive marketing campaigns seeking to represent whistleblowers in their efforts to win awards from the SEC. See, for example, www.secsnitch.com. “The reality is that we’ve now set up a competing mechanism with an incentive structure that no honest and diligent board can compete with. Congress is potentially gutting the ability of every honest director in America to do his or her job,” Stanford Law Professor and former SEC Commissioner Joseph Grundfest told attendees at an American Bar Association meeting in August. “The SEC has long advocated for corporate compliance programs, but this whistleblower-bounty program would essentially eviscerate them,” U.S. Chamber of Commerce spokesman David Hirschmann commented after the SEC issued its proposed rules.

What should you do now?

The SEC’s rulemaking process provides an opportunity for publicly-held companies, their trade associations and others to try to convince the SEC to adopt rules that will minimize the negative corporate governance implications of the new whistleblower program. We urge you to consider submitting comments to the SEC before the December 17 deadline. A large volume of thoughtful comments raising concerns could well have a positive impact on the SEC.     

In the meantime, we believe companies would be well-advised to expect the worst and to begin an assessment of their internal compliance programs in light of current best practices, as well as the evolution of those best practices likely to result in the near future from the Dodd-Frank provision. The internal “ethics hot line” processes for seeking and responding to employee concerns that have appeared to be sufficient in the past may no longer be adequate. Serious consideration should be given to enhancements that will encourage employees in more meaningful ways to use internal options for reporting their concerns about compliance with securities laws, as well as other laws applicable to their employers’ operations. Given the significance of the issues raised by the government’s new Dodd-Frank whistleblower program, senior management, as well as boards of directors, should be involved as reassessments are conducted.

We can help.

Troutman Sanders has assembled a team of lawyers, from a variety of disciplines and with extensive experience advising corporate clients in the establishment and administration of compliance programs, to provide assistance in responding to the new challenges presented by the Dodd-Frank whistleblower provision. In the near term, if you are interested in filing comments on the SEC’s proposed rules, we can assist you in preparing them. For the longer term, we can bring our experience and unique outside perspective to bear in working with you on an assessment of your current compliance activities and of changes to them that might now be advisable. 

CONTACT

Kevin C. Fitzgerald
202.274.2955

Terry Bridges
404.885.3163

Aurora Cassirer
212.704.6249

Brinkley Dickerson
404.885.3822

Richard Gerakitis
404.885.3328

Jeffrey Jakubiak
202.274.2892

Bryan Lavine
404.885.3170

Jacob A. Lutz
804.697.1490

DeWitt R. Rogers
404.885.3412

John S. West
804.697.1269

On October 6, 2010, the FDIC proposed 12 C.F.R. section 380 (the “Proposed Rule”) which addresses four different provisions of the OLA: (1) treatment of claims of similarly situated creditors; (2) continuation of certain personal services agreements; (3) provability of certain contingent claims; and (4) liquidation of insurance companies and their subsidiaries.  On October 19, 2010, the FDIC published notice of the Proposed Rule containing the text of the Proposed Rule and supplementary information (Supplementary Information”) and seeking public comment (“Request for Comment”) concerning the Proposed Rule and OLA generally for purposes of future rulemaking.  The comment period on the Proposed Rule ends on November 18, 2010 while the comment period on the more general questions posed by the FDIC ends on January 17, 2011.

Treatment of Similarly Situated Creditors’ Claims

Section 210(b)(4) of the Act permits the FDIC to pay certain creditors of a receivership more than other similarly situated creditors if necessary to (1) maximize the value of the assets; (2) initiate and continue operations essential to implementation of the receivership and any bridge financial company to which assets may be transferred for future sale or disposition by the receiver; (3) maximize the present value of return from the sale or other disposition of the assets, or (4) minimize the amount of any loss on sale or other disposition.  Section 380.2 of the Proposed Rule would define certain categories of creditors who never satisfy these requirements.  These include (1) holders of “long-term senior debt”; (2) holders of subordinated debt; (3) shareholders and other equity holders; and (4) other holders of general or senior unsecured claims (unless the Board of Directors of the FDIC specifically determines that additional payment or credits are necessary and meet the requirements of the Act).  The Proposed Rule defines “long-term senior debt” as “senior debt issued by a covered financial company to bondholders or other creditors that has a term of more than 360 days.” The term excludes partially funded, revolving or other open lines of credit that are necessary to continuing operations essential to the receivership or any bridge financial company and contracts to extend credit enforced by the receiver under the Act.
 
The Supplementary Information states that extraordinary payments made under such authority are subject to clawback by the FDIC in the event the proceeds from the sale of the assets of the covered financial company are insufficient to repay any monies drawn by the FDIC from the United States Treasury during the liquidation, thereby assuring creditors of the covered financial company will be assessed before the financial industry as a whole will be under provisions of the Act.  Importantly, the Supplementary Information also provides that such payments must be considered in light of the Act’s required report to Congress, not later than 60 days after appointment of the FDIC as receiver for a covered financial company specifying the identity of any claimant treated in a manner different from other similarly situated claimants, the amount of any payments and the reason for such action.  It suggests that this information will allow other creditors to file a claim asserting challenges to such payment.

Personal Service Agreements

Section 380.3 defines “personal service agreement” as a written agreement between an employee and a covered financial company, covered subsidiary or a bridge financial company setting forth the terms of employment, including a collective bargaining agreement.  Before repudiation of such an agreement, the FDIC as receiver may utilize the services of employees who have a personal service agreement and any payments would be treated as an administrative expense of the receiver.  Any party that acquires a covered financial company or any operational unit, subsidiary or assets thereof from the FDIC as receiver or from any bridge financial company will not be bound by a personal service agreement unless the acquiring party expressly assumes the personal service agreement. The provision for payment of employees would not apply to senior management participating in major policy making functions of the covered financial company. The Proposed Rule defines the term “senior executive” as a person who has authority to participate (other than in the capacity as a director) in major policymaking functions including certain high ranking officers enumerated therein unless the person is excluded by resolution of the board of directors, bylaws, operating agreement or partnership agreement of the company from participation (other than as a director) in major policy making functions of such company.  The acceptance of services subject to a personal service agreement by the FDIC or any bridge financial company would not limit or impair the ability of the receiver to later disaffirm such agreement nor to recover compensation from any senior executive or director of a failed financial company.

Contingent Claims

The Act has provisions concerning allowance of contingent claims.  For clarification, section 380.4 of the Proposed Rule provides that claims based on contingent obligations of the covered financial company consisting of a guarantee, letter of credit, loan commitment, or similar credit obligation, may be provable against the FDIC if such contingent obligation becomes due and payable upon the occurrence of a specified future event (other than the mere passage of time) which event (1) is not under the control of either the covered financial company or the party to whom the obligation is owed and (2) has not occurred as of the date of the appointment of the FDIC as receiver.  If the receiver repudiates a guarantee, letter of credit, loan commitment, or similar credit obligation that is contingent as of the date of the receiver’s appointment, the actual direct compensatory damages for repudiation would be no less than the estimated value of the claim as of the date that the FDIC was appointed receiver of the covered financial company based upon the likelihood that such contingent claim would become fixed and the probable magnitude of such claim. There is no standard set for determining the likelihood that a contingent claim will become fixed or the probable magnitude of the claim.

Liquidation of Covered Financial Companies that are Insurance Company Subsidiaries; Lien Limitation

Proposed Rule section 380.5 provides that the FDIC shall distribute the value realized from the liquidation, transfer, sale or other disposition of the direct or indirect subsidiaries of an insurance company, that are not themselves insurance companies, solely in accordance with the order of priority in section 210(b)(1) of the Act.  Although the Proposed Rule does not so state, it appears to be predicated on the assumption that not only is the subsidiary not an insurance company but also that the subsidiary is a covered financial company subject to section 210(b)(1).  The Supplementary Information indicates that the purpose of section 380.5 of the Proposed Rule is to clarify that such value will be available to the policyholders of the parent insurance company to the extent required by the applicable State laws and regulations.  However, under Section 210(b)(1) obligations to shareholders have the lowest priority.  Therefore, the language of section 380.5 of the Proposed Rule appears to be inconsistent with the purpose stated in the Supplementary Information.

Section 380.6 limits liens by the FDIC on assets of covered financial companies that are insurance companies or covered subsidiaries of insurance companies.

The foregoing is only a summary of certain of the many significant issues affecting financial institutions.  If you have any questions about the foregoing or about other financial institution issues, please direct them to your regular contact at Troutman Sanders LLP or to any of the persons listed in the sidebar to this release.

CONTACT

Hollace T. Cohen
Deputy Practice Group Leader (Bankruptcy)
212.704.6067

Jake Lutz
Practice Group Leader
(Financial Institutions)
804.697.1490

Section 922 of the Dodd-Frank Act establishes a new whistleblower program (the Program) for individuals that provide information to the Securities and Exchange Commission (the SEC) about securities law violations.  If a whistleblower provides original information(1) to the SEC and this information leads to a successful SEC enforcement proceeding, the Program may award to the individual providing the information between 10 percent and 30 percent of any sanction imposed over $1 million.  The Program also protects whistleblowers against retaliation by an employer because of providing information to the SEC under the Program, participating in any investigation or enforcement activity initiated by the SEC based upon the information provided, or making public disclosures that are otherwise provided by federal securities laws. 

Although the SEC must issue final regulations by April 17, 2011 to fully implement certain aspects of the Program, the whistleblower protections against retaliation, the accompanying private right of action and eligibility for whistleblower awards began immediately upon enactment of the Dodd-Frank Act.  As compared to the whistleblower provisions of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley), the Program provides greater remedies and longer filing periods than Sarbanes-Oxley, without requiring (as Sarbanes-Oxley does) that the whistleblower exhaust available administrative remedies with the Department of Labor before filing an action in federal district court to enforce the Program’s anti-retaliation protections.

Section 922 of the Dodd-Frank Act also amends the whistleblower provisions of Sarbanes-Oxley to extend the time in which whistleblowers must file claims with the Department of Labor to 180 days, and to begin this time at the later of the date on which the violation occurs or the date on which the whistleblower became aware of the securities law violation.  Also as a result of the Dodd-Frank Act, whistleblowers claiming protection under Sarbanes-Oxley are now entitled to a jury trial and companies cannot avoid litigation of Sarbanes-Oxley retaliation claims through arbitration agreements or settlement and release agreements to be signed by the whistleblower that waive anti-retaliation rights provided by Sarbanes-Oxley.

Employees of companies that provide consumer financial products or services will receive additional whistleblower protections, commencing when the Consumer Financial Protection Bureau (CFPB) receives its authority over federal consumer financial laws on July 21, 2011.  Section 1057 of the Dodd-Frank Act protects these employees from retaliation because of providing information to the CFPB or other government agency about violations of the Dodd-Frank Act’s consumer protection provisions or other law or regulation enforced by the CFPB, testifying in a proceeding or filing an action under any federal consumer financial law, or refusing to participate in an activity the employee reasonably believes violates any law subject to the CFPB’s jurisdiction.  Similar to the revised Sarbanes-Oxley provisions, companies generally cannot avoid litigation of Section 1057 retaliation claims by using pre-dispute arbitration agreements or settlement and release agreements signed by the whistleblower that waive anti-retaliation rights provided by Section 1057.

In light of these significant increases in whistleblower protections and reporting incentives, publicly-traded companies and companies that provide consumer financial products and services should: (1) ensure that proper reporting mechanisms and anti-retaliation policies are implemented, (2) consider strategies to encourage internal reporting of concerns regarding compliance with securities and consumer financial protection laws, (3) review and revise management and board of directors training programs to include information on recognizing corporate whistleblower complaints, and (4) implement policies for processing and responding to any such complaints received by company management or the board.

The foregoing is only a summary of certain of the many significant issues affecting financial institutions.  If you have any questions about the foregoing or about other financial institution issues, please direct them to your regular contact at Troutman Sanders LLP or to any of the persons listed in the sidebar to this release.

Today, Attorneys General have joined together in one of the largest multi-state investigations in recent history, combining not only Attorneys General of 50 states but also the concomitant offices of state banking and financial regulators.  This is one of the largest and most divergent investigations in recent history.  Moreover, this investigation is novel because it is one of the few where Attorneys General are aligning their efforts with their respective relevant state regulatory agencies. 

As indicated in the email alert of October 13, 2010 these Attorneys General will also be attempting to work with federal enforcement authorities, as authorized under the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The press release circulated by the National Association of Attorneys General, whose effort is being spearheaded by Attorney General Tom Miller of Iowa, makes it apparent that the Attorneys General are analyzing the application of their respective state consumer fraud laws to various mortgage loan servicers.

If you have any questions or would like additional information, please contact Ashley L. Taylor, Jr. at ashley.taylor@troutmansanders.com or 804.697.1286.

In June 2010 the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (together, the Regulatory Agencies) issued guidance on sound incentive compensation policies for banking organizations.  This guidance states that compensation arrangements at banking organizations should provide employees incentives that appropriately balance risk and reward (so as to not encourage imprudent risk-taking), be compatible with effective controls and risk-management, and be supported by strong corporate governance, including active and effective oversight of incentive compensation arrangements by the board of directors(1). The Regulatory Agencies expect banking organizations to take prompt action to address the principles set forth in its guidance.  They may take enforcement action against any banking organization with relevant arrangements that are not compliant with the guidance.

Banking organizations that are publicly traded (or their publicly-traded holding companies, as applicable) also must increase executive compensation disclosures in proxy statements and annual reports once the disclosure requirements contained in the Dodd-Frank Wall Street Reform and Customer Protection Act (the Dodd-Frank Act) are effective.  In late 2010, the Securities and Exchange Commission (the SEC) plans to propose rules giving shareholders an advisory vote on executive compensation and so-called golden parachutes.  In mid-2011, the SEC plans to propose rules requiring disclosure of the relationship between the executive compensation actually paid and the company’s financial performance, and the ratio of CEO compensation to median employee compensation.

Organizations that focus on corporate governance continue to issue updates to their proxy voting policies, which become more and more influential and must be considered when evaluating compensation practices.  Public companies will need to adopt policies that will recapture certain incentive compensation paid to employees.  Banking organizations will need to evaluate their relationships with compensation consultants for potential independence and conflict issues.  Even pension funding relief, as enacted under the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act, will be affected by the amount of compensation paid to employees.

Another potential area of regulatory focus is compliance with Internal Revenue Code (Code) Section 409A, which governs all types of nonqualified deferred compensation.  By December 31, 2008, banking organizations should have reviewed and amended, if needed, all nonqualified deferred compensation arrangements (including all deferred compensation plans, employment agreements, severance and change in control agreements, equity compensation plans and similar types of arrangements) to ensure either compliance with Code Section 409A or an exemption from Code Section 409A.  For those who missed the deadline, the IRS has established a correction program for arrangements that do not satisfy the document requirements of Code Section 409A.  One of the most favorable provisions of the correction program is the ability to correct document failures by December 31, 2010 and avoid the unfavorable tax consequences that typically apply upon noncompliance with Code Section 409A.

In light of these developments, we recommend that banking organizations review their executive compensation agreements and incentive compensation plans and policies as well as their corporate governance and SEC compliance procedures during the 4th quarter of 2010.  Such a review will prepare the banking organization for upcoming regulatory examinations, will identify compensation issues for action by the bank or the bank’s board of directors, and will better position the bank or bank holding company to respond to the shareholder vote on executive compensation requirement, the executive compensation disclosure requirements, and any other requirements contained in the Dodd-Frank Act.  Moreover, this is one last chance to correct Code Section 409A problems at relatively little cost.

We will continue to monitor how the Regulatory Agencies incorporate reviews of  executive and incentive compensation into bank regulatory examinations, and how the SEC implements the Dodd-Frank Act’s executive compensation disclosure requirements.  We will provide our friends and clients with future updates regarding these important and timely issues.

The foregoing is only a summary of certain of the many significant issues affecting financial institutions.  If you have any questions about the foregoing or about other financial institution issues, please direct them to your regular contact at Troutman Sanders LLP or to any of the persons listed in the sidebar to this release.

He has announced that he is now putting together a broad multistate bipartisan coalition of Attorneys General, working together with federal banking regulators under the new powers and authority of the Dodd/Frank Act regulating financial practices.  

CONTACT

Jake Lutz
Practice Group Leader
804.697.1490

John C. Lynch
757.687.7765

Ashley L. Taylor, Jr
804.697.1286

Anthony F. Troy
804.697.1318

Under the SBLF the United States Treasury (the Treasury) will make capital investments by purchasing securities in participating community banks, most likely in the form of senior preferred stock.  The SBLF limits investment by the Treasury to 5 percent of risk-weighted assets for participating banks with total assets of $1 billion or less, and to 3 percent of risk-weighted assets for participating banks with more than $1 billion but less than $10 billion of total assets.  Community banks with a 4 or 5 CAMELS rating (or have had such a rating in the past 90 days) may not participate in the SBLF.  Although the dividend rate of SBLF securities would initially be set at 5 percent, the participating community bank could decrease the dividend rate by increasing its small business lending; as a general example, to decrease the dividend rate to 1%, small business lending must increase by 10% or more.  However, four and a half years after issuance, the dividend rate on SBLF securities will increase to 7 percent regardless of the level of small business lending.

The Treasury will review applications to participate in the SBLF and will consult with each applicant’s federal and state regulators, as applicable, before deciding whether to award SBLF funds. The SBLF does not limit the Treasury’s discretion to deny an application for SBLF funds.  The SBLF also authorizes the Treasury and federal banking regulators to consider making an SBLF investment in an otherwise eligible community bank conditioned on private matching investments.  In circumstances where private matching investment is required, then Treasury may only invest up to 3% of risk-weighted assets of the community bank.  When applying to participate in the SBLF a community bank must submit a plan describing how its business strategy allows it to address the needs of small businesses in its market area. This small business lending plan will be considered confidential supervisory information and will not be publicly available. Under the SBLF, “small business lending” is broadly defined to generally include all loans of less than $10 million to small businesses other than acquisition, development and construction loans.     

The SBLF instructs the Treasury to issue regulations to permit eligible community banks to refinance preferred stock issued to the Treasury pursuant to the TARP program.  Although such participation in the SBLF would not provide additional capital, a community bank refinancing in this manner could reduce the cost of capital issued to the Treasury and possibly eliminate TARP executive compensation restrictions.

The SBLF is not part of TARP and does not currently contain TARP-like executive compensation restrictions; however, the SBLF authorizes the Treasury to issue additional regulations regarding participation in the program in order to “manage risks associated with the administration of the [SBLF].”  This provision gives the Treasury authority, if it desires, to implement regulations for SBLF participants similar to those imposed upon TARP participants.  The SBLF also instructs the federal banking agencies to issue regulations regarding minimum underwriting standards for loans made by participating community banks.

The foregoing is only a summary of one of the many significant issues affecting financial institutions.  If you have any questions about the foregoing or about other financial institution issues, please direct them to your regular contact at Troutman Sanders LLP or to any of the persons listed in the sidebar to this release.

CONTACT

Jake Lutz
Practice Group Leader
804.697.1490

Tom Powell
404.885.3294

Jerome Walker
212.704.6286

CONTRIBUTOR

Seth Winter
804.697.2329

Under the SBLF, the United States Treasury (the Treasury) would make capital investments by purchasing securities in participating community banks, most likely in the form of senior preferred stock.  As proposed, the SBLF limits investment by the Treasury to 5 percent of risk-weighted assets for participating banks with total assets of $1 billion or less, and to 3 percent of risk-weighted assets for participating banks with more than $1 billion and less than $10 billion of total assets.  The SBLF aims to stimulate small business lending by reducing the dividend rate on SBLF capital investments as a participating community bank increases lending to small businesses.  Although the dividend rate would initially be set at 5 percent, the participating community bank could decrease the dividend rate to 1 percent by increasing its small business lending, thus providing the bank with an attractive and relatively inexpensive source of capital.

As proposed, the SBLF also provides an attractive option for many community banks to refinance preferred stock issued to the Treasury pursuant to the TARP program.  The primary advantages of such a refinancing would be: (1) by increasing small business lending, the participating community bank could decrease the dividend rate on SBLF securities well below the 5 percent (and 9 percent after five years) TARP dividend rates; and (2) participation in the SBLF is likely to impose fewer restrictions on the participating community bank than TARP participation, including fewer restrictions on executive compensation.  However, community banks participating in the SBLF to refinance TARP securities would be required to be current on their dividend payments to the Treasury.

Senate approval appears to be the only remaining obstacle to the SBLF, as the House has already approved H.R. 5297 and the President is a strong advocate who intends to sign the bill into law as a jobs creation initiative.  Thereafter, the Treasury would be required to announce eligibility requirements and application processes for community banks to participate in the SBLF.  The Financial Institutions Practice Group at Troutman Sanders will continue to monitor all developments regarding the SBLF and will notify its clients and friends of any opportunity to participate in this capital investment program.

The foregoing is only a summary of one of the many significant issues affecting financial institutions.  If you have any questions about the foregoing or about other financial institution issues, please direct them to your regular contact at Troutman Sanders LLP or to any of the persons listed in the sidebar to this release.

CONTACT

Jake Lutz
Practice Group Leader
804.697.1490

Tom Powell
404.885.3294

Jerome Walker
212.704.6286

CONTRIBUTOR

Seth Winter
804.697.2329