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Banking & Finance Law Report

Significant Changes to Ohio Foreclosure Law Proposed

Posted in Collection and Foreclosure, Ohio Law

Legislation has been introduced in the Ohio House that would amend Ohio’s foreclosure law in a manner favorable to licensed auctioneers and realtors and unfavorable to county sheriffs and appraisers. As set forth below, House Bill 586 would, among other things, permit “private selling officers” to conduct judicial sales of real property; permit written or electronic bidding; eliminate the requirement that judgment creditors or lienholders who appear in an action pay deposits and eliminate the three-freeholder appraisal. The bill was introduced on June 17, 2014, and proposes amendments to O.R.C. §§2329.151, 2329.17, 2329.18, 2329.19, 2329.20, 2329.271, 2329.28, 2329.34, and 2329.39 and would enact new sections 2329.152 and 2329.311.

R.C. §2329.151 would be amended to permit goods and chattels levied upon execution to be sold by a licensed auctioneer who is a resident of the state and would permit sales of land upon execution to be auctioned by a “private selling agent”, defined at R.C. §2329.152(H) as a state resident who is both a licensed auctioneer under R. C. Chapter 4707 and a real estate agent under R. C. Chapter 4735. Continue Reading

Ohio Law on Cognovit Judgments and Relief Under Civ R. 60(B)

Posted in Collection and Foreclosure, Commercial Law, Commercial Loans and Leases

In K One Limited Partnership v. Salh Khan, et al., 10th Dist. No. 13AP-830, 2014 Ohio 2079, the Tenth District Court of Appeals for Franklin County, Ohio reexamined the limited meritorious defenses available to obtain relief from a cognovit judgment under Civ. R. 60(B) and held that such defenses are restricted “to the integrity and validity of the creation of the debt or note, the state of the underlying debt at the time of confession of judgment, or the procedure utilized in the confession of judgment on the note.”

Defendants-Appellants executed a cognovit guaranty containing warrant of attorney language (“Guaranty”) to guarantee payment of a related-company’s revolving cognovit promissory note (“Note”) in favor of Plaintiff-Appellee. The parties and others were involved in numerous business ventures when they entered into the Guaranty and Note. When the Note subsequently went unpaid, Plaintiff-Appellee brought a cognovit action to confess judgment against Defendants-Appellants on the Guaranty, and the trial court entered cognovit judgment in favor of Plaintiff-Appellee. Defendants-Appellants timely filed a motion for relief from judgment under Civ. R. 60(B) admitting they executed the Guaranty but alleging as defenses that Plaintiff-Appellee and related individuals and entities had acted fraudulently toward them in this and other transactions and intentionally misled them into executing the Guaranty. They also alleged they had legal and equitable claims relating to these and other business transactions pending against these parties in another jurisdiction. The 60(B) motion did not allege payment, partial payment or defects in the Guaranty or Note as defenses, and the trial court denied their motion for relief from judgment. Defendants-Appellants then appealed to the Tenth District Court of Appeals (“Appeals Court”). Continue Reading

Intellectual Property and Banking – The Complications of Distinguishing Your Bank Name

Posted in Bank Regulation, Community Banking, Intellectual Property

Expansion of Banking: What happens when First National Bank is no longer First?

Ask any community banker and she will tell you that bank name disputes are on the rise. The Third Federal Circuit Court of Appeals attributes the rise of bank name disputes to “an outgrowth of aggressive and expansionist banking flowing from the Congressional liberalization… of national banking laws.” Citizens Financial Group, Inc., v. Citizens Nat’l Bank, 383 F.3d 110, 112 (3rd Cir. 2004). This case is one of many examples of disputes arising between two financial institutions, in similar geographic regions, operating under identical or a confusingly similar name (e.g., Citizens National Bank of Evans City and Citizens Financial Group, Inc.).

Today we are accustomed to large banks having developed into multinational corporations, such as JP Morgan Chase or Wells Fargo, but this growth occurred in most cases only in the late twentieth century. But the banking industry began with banks being purely local entities, the sole bank within a town or a smaller city as opposed to multi-branch banks within the same metropolis or state. For many banking organizations, this is still true. Within these towns, the use of names like First National Bank or Columbus City Bank were distinctive enough because that was the only show in town and everyone knew where they were banking. It was unlikely that another First National Bank two towns over would confuse or mislead consumers. The National Bank Act fostered the practice of bank names being rather undistinctive and descriptive furthered by state regulation keeping a firm grip on the use of “bank” and related terms by non-banking entities.

The pace of recent change in the banking landscape has not generally been matched by changes in the traditional naming of banking institutions, as local banks have grown from single branches to multi-branch statewide, nationwide, and eventually multinational financial institutions. Throughout this expansion it has become harder and harder to differentiate between the once distinctive names of First, Second, or Third and courts are still struggling to come to terms with how to deal with rival banks operating under the same name. This article discusses both trademark and trade name principals as applied to banking and offers practice pointers in creating and maintaining bank names today.

Bank Names and Trademark Law: Requirement of Distinctiveness and Secondary Meaning

The underlying principal of trademark law is that a trademark signals to consumers the source of the associated goods from other identical or related goods and services offered by other sources. The United States Patent and Trademark Office (USPTO) and courts generally classify marks along a continuum from fanciful to generic. Fanciful, arbitrary and suggestive marks are deemed to be inherently distinctive in nature and are considered strong marks afforded a much broader scope of protection. Fanciful marks comprise terms that have been invented for the sole purpose of functioning as a trademark or service mark (e.g., PEPSI or KODAK). TMEP 1209.1(a). Arbitrary marks comprise words that are in common usage but, when used to identify particular goods or services, do not suggest or describe a significant ingredient, quality, or characteristic of the goods or services (e.g., APPLE for computers). See, e.g., Palm Bay Imports, Inc. v. Veuve Clicquot Ponsardin Maison Fondee En 1772, 396 F.3d 1369, 1372 (Fed. Cir. 2005) (VEUVE – meaning WIDOW in English – held to be “an arbitrary term as applied to champagne and sparkling wine”). Suggestive marks require imagination, thought or perception as applied to the specific goods or services, such as Wachovia bank, which is the name of the original settlement in the bank’s home region of North Carolina – its suggestive of that state’s history and therefore, inherently distinctive.

Lower on the continuum and afforded a limited scope of protection, or no protection, are descriptive and generic marks. A mark is descriptive if it describes an ingredient, quality, characteristic, function, feature, purpose, or use of the specified goods or services (e.g., APPLE PIE in relation to potpourri). In order for a descriptive mark to be eligible for federal trademark protection it must have acquired distinctiveness or secondary meaning. The weakest marks are those that are generic or have become generic, and are terms which are relevant to the consuming public such as a common name for the good or service (e.g., bank). The majority of bank names fall into the descriptive category, such as First National Bank or Columbus Savings Bank. Such marks are not inherently distinctive and must acquire secondary meaning. Therefore, banks either need to obtain common law trademark rights acquired through use and secondary meaning or federal trademark rights, which often can be difficult given the less distinctive nature of their marks.

Distinctiveness and Secondary Meaning

When a mark is descriptive, parties must prove that the mark has acquired distinctiveness through secondary meaning. Union Nat’l Bank of Texas, Laredo, Texas v. Union Nat’l Bank of Texas, Austin, Texas, 909 f.2d 839, 845 (5th Cir. 1990). “Secondary meaning is used generally to indicate that a mark has come through use to be uniquely associated with a specific source.” Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763,766 (1992). Secondary meaning is found by looking at several factors: (1) direct consumer testimony; (2) consumer surveys; (3) exclusivity, length, and manner of use; (4) advertising; (5) amount of sales and number of customers; (6) established place in the market; and (7) proof of intentional copying. DeGidio v. West Group Corp., 355 F.3d 506, 513 (6th Cir. 2004). Due to the undistinctive nature of bank names, secondary meaning will play a critical role in infringement claims. It may be increasingly difficult for banks to establish secondary meaning if consumers are unable to identify the source of goods/services because banks are using similar or identical trademarks – this increases the need for consumer surveys and evidence of advertising. Courts have placed emphasis on the effect on consumers rather than the efforts of the bank. First Bank v. First Bank System, Inc., 84 F.3d 1040 (8th Cir. 1996).

Even when banks attempt to make their names more distinctive, they often fail even when trying to overcome this entrenched practice of naming. In Sun Banks of Florida. Inc., both banks began using a geographically descriptive mark but both moved to the use of the term “sun.” Sun Banks of Florida, Inc. v. Sun Federal Sav. & Loan Assoc., 651 F.2d 311, 313 (5th Cir. 1981). Although the term SUN was not descriptive of banking services over 4400 businesses in 1976 had the same idea to use “sun,” rendering a seemingly arbitrary mark unenforceable because of widespread use amongst financial institutions. In the case of a weak mark the use of minor additions such as bank versus federal savings and loan, as well as a design element, may be enough to preclude confusion and infringement but shouldn’t necessarily be relied upon.

Ramifications of not registering

Not only is it imperative to choose a distinctive trademark but also to register the mark early federally. With a federal trademark registration there is a five-year period where, if no one contests the trademark, the mark rights are treated as incontestable regardless of whether someone else had been using that name before the registration. The Ohio Valley National Bank founded in 1880, had been using this name for over 120 years before being forced to change it by one of its competitors. In 1994 another area bank changed its name to Ohio Valley Bank. The competitor speedily proceeded to obtain a federal trademark registration and the original Ohio Valley bank never contested the new banks trademark rights. This left the original Ohio Valley with the choice to coexist under the same name or change their name, which they eventually did to Ohio Valley Financial Group. The bottom line is that banks need not only take into account what they are intending to name their bank but what protection strategies they should put in place to protect their mark from the encroachment of their competitors.

State Law and FDIC Join the Party on Bank Names

Not only do the principals of basic trademark law play into naming or renaming a bank or branches but both state law and the FDIC complicate the matter – for the past 15 years, issues have been revolving around different branch names within the same institution.

The FDIC intends to keep depositors educated

The Federal Deposit Insurance Corporation (FDIC) along with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision issued an Interagency Statement weighing in on the practice of an insured deposit institution operating branches under different trade names on May 1, 1998. Then, as now, there are no federal laws or regulations requiring insured deposit institutions to operate under a single name; there are, however, state laws which must be considered with respect to operating under a trade name.

The primary concern is that each depositor is insured up to maximum federally insured amount now $250,000, and if consumers are unaware that they are dealing with a single institution they may inadvertently exceed the FDIC deposit insurance limits on the belief they are dealing with separate entities. The Statement urged institutions that consumers must be aware of the scope and limits of the FDIC under these circumstances and place a burden on the institutions to take reasonable steps to educate such consumers. The purpose of this is to ensure consumer awareness that they are not believing that the institution whose branches are operating under different names are separate or that deposits to each branch were individually insured. The Statement goes on further to give examples of protective measures in which this type of institution should take to ensure consumer awareness, ranging from posting conspicuous signs and language, using the legal name of the institution on documents, educating staff members to alleviate confusion, and obtaining a signed acknowledgement from depositors that they are aware of the circumstances.

Before adhering to the FDIC, check your state laws

A year after the FDIC Interagency Statement, states were continually weighing in on what banks could and couldn’t call themselves. The Michigan Department of Consumer and Industry Services, issued an opinion, for example, prohibiting a credit union chartered by the state from operating under multiple names even though the credit union intended to “implement reasonable measures to ensure that members and others [were] not confused or misled in their dealings with the credit union.” The Department of Consumer and Industry Services reasoned that although the FDIC has issued guidelines regarding the instant issue, the regulation of trade names was a matter of Michigan state law, regardless of whether it was state or federally chartered. The Department, in its opinion letter, points to three federal regulatory agencies indicating that none have issued any preemptive regulation expressly authorizing or prohibiting the use of trade names under federal law. In denying the credit union’s request, the Department relied solely on Michigan law – in which the name of the Michigan chartered credit union is subject to the Commissioner of the Departments approval. MCL 490.1, et seq.: MSA 23.481, et seq. Michigan law contemplated that credit unions would operate solely under one name regardless of the federal guidelines issued by the FDIC.

Contrary, in a more recent case hailing from the Nevada Board of Finance, the Board reversed a decision by the Nevada Commissioner of Financial Institutions regarding the use of the term “Nevada” within the bank name. On December 31, 2013, the Bank of Nevada merged with Western Alliance Bank based out of Phoenix. At this time the Bank of Nevada had to relinquish its Nevada bank charter and under Nevada state law a non-Nevada chartered bank is prohibited from using Nevada in its name. The Commissioner required the Nevada named bank to operate under Western Alliance Bank because it was now operating under an Arizona charter. The Board, however, found that more confusion would result by having Bank of Nevada change its name because it had been founded by Nevada residents, had been operating under the name since 1994, there was no change in ownership, and of the 13 members on the Western Alliance Board, 7 were from Nevada.

Ohio state law sets out the laws for reservation of bank names, in Chapter 11 of the Ohio Revised Code. The code requires a bank name to include “bank,” “banking,” “company,” or “co.” but may include the word “state.” Ohio Rev. Code §1103.07(A)(1-2). It further cannot be “likely to mislead the public as to the bank’s character and purpose.” Ohio Rev. Code §1103.07(A)(3). The superintendent must conclude that the name is distinguishable from all names already recorded by existing financial institutions unless the earlier institution has filed written consent with the superintendent. Ohio Rev. Code §1103.07(A)(4). A written application to reserve a bank name organized under Chapter 1113 of the Ohio Revised Code or already in existence must be filed with the superintendent, if the superintendent finds that the specified name satisfies the requirements then it will be endorsed and the reservation forwarded to the Secretary of State. Ohio Revised Code§1103.07(B).

It appears that Ohio Law does not prohibit either the use of the state name, Ohio, or preclude a bank from operating branches under different names. Although different branch names may be allowable under Ohio state law, banks must still adhere to the prescribed guidelines made by the FDIC in its Interagency Statement by making reasonable efforts to educate consumers about the scope of FDIC insurance and their insured deposits at each of these branches.

Efforts Banks Can Make

Stand out from the crowd: be distinctive and register.

When banks are created, make acquisitions, or rename it’s important to make the bank name distinctive. Today, many banks are no longer dealing in small geographic bubbles but on a much larger scale in little on improvements in communications technology, it is imperative to develop a name that falls higher on the distinctiveness continuum. Banks can do this by thinking outside the traditional “box” when it comes to naming conventions, such as First, Second, Third, or your typical geographical markers. Using common descriptive terms in naming a bank will make it much harder to protect as a trademark against other uses of the same mark in similar industries. If intending to use a mark that is not inherently distinctive it may be a benefit to include minor additions, such as using a term or combination of terms that signify bank without actually using the term bank, as well as adding a distinguishable design element. By taking these factors into consideration banks would be more likely to be able to obtain a federal trademark registration due to the distinctiveness of the mark, which in turn will place less emphasis on secondary meaning in the event of a trademark infringement action.

Register early on, as the dilemma Ohio Valley Bank faced after nearly 120 years of operating under the same name, it is important to register early once a bank name has been decided and recorded. Federal registration provides many advantages including becoming incontestable after five years.

State Laws v. FDIC Guidelines

While naming a bank, it is important to check your state laws first. State law not federal law proscribes the requirements of bank names. From the examples discussed above, its apparent that states vary widely in the their legal approach to bank names, so there are implications to be considered when selecting a state in which to charter your bank if a multi-state business plan has been adopted. If the selected state does not prohibit the use of different branch names operated by a single entity and a decision is made to use different names, then the chartering group should make sure it adheres to FDIC guidelines and implements effective consumer awareness procedures.

Ohio Foreclosure Procedure . . . Twice the Appeal

Posted in Collection and Foreclosure, Ohio Law, Real Estate

Earlier this month the Supreme Court of Ohio resolved a split of authority between the Fifth District and Seventh District regarding whether a foreclosure decree is a final appealable order when it includes unspecified amounts advanced by the mortgagee for inspections, appraisals, property protection and the like. Prior to the May 15 decision in CitiMortgage, Inc. v. Roznowski1, it was unclear whether a judgment decree of foreclosure – which typically includes unspecified amounts that may be advanced by the mortgagee prior to confirmation of the foreclosure sale for inspections, appraisals, property protection and maintenance – is a final appealable order, or whether a foreclosure defendant must wait until after the property has been sold at sheriff’s sale and the order of confirmation of sale issued before he or she may appeal.

The Supreme Court of Ohio’s decision in the CitiMortgage case establishes that there are two separate opportunities for appeal. The first opportunity arises after the trial court issues a judgment decree of foreclosure. The Court found that as long as the foreclosure decree addresses the rights of all lienholders and the responsibilities of the mortgagor – regardless whether all exact amounts for which the mortgagor is liable are set forth in the judgment order, such as interest and protective advances made or to be made by the mortgagee – the foreclosure decree constitutes a final appealable order. A party appealing a foreclosure decree may challenge “the court’s decision to grant the decree of foreclosure” and once that appeals process has run its course, “all rights and responsibilities of the parties have been determined and can no longer be challenged.”

The second opportunity for appeal arises after the trial court issues an order confirming the foreclosure sale, which order sets forth the specific damage amount and orders distribution of sheriff’s sale proceeds accordingly. The Court stated that because some amounts will necessarily not be calculated until after the sale of the property, such as interest and protective advances made by the mortgagee up to the time of sale, the proper time for foreclosure defendants to contest the accuracy and validity of those amounts is after the confirmation order is issued, which is also the appropriate time to contest generally “whether the sale proceedings conformed to law.” But as the Court pointed out, a mortgagor cannot seek to undo the foreclosure decree itself via an appeal of a confirmation order because the proper time to appeal the validity of the foreclosure itself is after the foreclosure decree is issued, not after the order confirming the sale of the property is issued. As the Court summarized it, “if the parties appeal the confirmation proceedings, they do not get a second bite of the apple, but a first bite of a different fruit.”




FBI increases criminal fraud investigations by 65%, director reports

Posted in Bank Lending, Collection and Foreclosure, Litigation

FBI Director James Comey shared the bureau’s enforcement trends and objectives at the New York City Bar Association’s Third Annual White Collar Crime Institute on May 19.

Comey recognized that although counter-terrorism is still a top priority for the agency, white-collar cases are receiving significant focus and resources. In the mortgage industry, agents are investigating foreclosure rescue companies preying on stressed homeowners and criminals who target senior citizens with the lure of reverse mortgages. In money laundering, enforcement targets are involved in a buying anonymous prepaid credit cards, using of “virtual currency” to transfer money and using smaller institutions to inject money into the banking system. In securities markets, the FBI also is targeting micro-cap market manipulation, insider trading and accounting fraud.

Comey emphasized in his remarks that the FBI has received additional resources from Congress, which allowed the agency to hire 2,000 people this year. In addition, he disclosed that more than 1,300 agents are working more than 10,000 white collar crime cases. These figures represent a 65% increase in the number of criminal fraud cases investigated by the FBI since 2008. Continue Reading

U.S. Supreme Court Says Restitution Depends on Property a Lender Loses, not Collateral the Lender Receives

Posted in Bank Lending, Collection and Foreclosure, Workouts

In the unanimous ruling Monday, the U.S. Supreme Court resolved a split in circuits regarding the interpretation of the Mandatory Victim’s Restitution Act (MVRA). In Robers v. United States, the high court confirmed that for purposes of calculating restitution, the return to the lender of collateral securing a fraudulent loan is not completed until the victim lender receives money from the sale of the collateral.

In 2010, Robers was convicted in federal court of conspiracy to commit wire fraud relating to two houses that Robers purchased by submitting fraudulent loan applications. When Robers failed to make loan payments, the banks foreclosed on the mortgages and, in 2006, took title to the two houses. The houses were sold in 2007 and 2008 in a falling real estate market. At sentencing, Robers was ordered to pay restitution of approximately $220,000, equal to the loan amount, minus the money that the banks had received from the sale of the two homes.

On appeal, Robers challenged the sentence imposed pursuant to the MVRA and argued that the MVRA required the court to determine the amount of loss based upon fair market value of the homes on the date that the lenders obtained title to the house, as opposed to the fair market value on the date that the properties were sold. Continue Reading

Keeping up with the dot-anythings

Posted in Corporate Law, PWMA News, PWMA Practice

For the past several weeks, our colleagues at Technology Law Source have been working hard to keep readers apprised of developments related to The Internet Corporation for Assigned Names and Numbers’ new generic top-level domain (gTLD) program. This program, which is essentially redefining the face of the Internet, is likely to impact any business — or, indeed, any entity — with a web presence. If you haven’t been able to keep up with the hundreds of gTLDs already delegated this year, download this hot-off-the-press e-book: Protecting Your Brand in a New gTLD World.

You also may want to subscribe to Technology Law Source (use the “Subscribe by email” prompt in the left column of the site) to receive weekly updates about the evolution of the gTLD program and the dot-anythings launching each month.


Ohio Supreme Court to Address Issues Arising in Schwartzwald’s Wake

Posted in Collection and Foreclosure

As all professionals whose business involves the prosecution of foreclosures in Ohio almost certainly know by now, the Ohio Supreme Court’s decision in Fed. Home Loan Mortg. Corp. v. Schwartzwald1 provided that the foreclosing plaintiff must have standing to bring the action at the time the plaintiff files the complaint. Typically this requires the claimant to be the holder of the note and mortgage at the time it files its foreclosure complaint. The substance of the court’s holding in Schwartzwald does not leave much room for interpretation, but the actual application of the decision in practice has led to a number of procedural questions and disputes. The Supreme Court of Ohio has again stepped up and agreed to hear two specific cases where the district courts of appeal have rendered differing standards.

The first question involves the extent to which proof of standing needs to be offered at the time of filing the complaint, arising out of Wells Fargo Bank, N.A. v. Horn.2 The issue in dispute in Horn relates to whether the foreclosing plaintiff need affirmatively prove its standing at the time of filing the complaint – in other words, whether sufficient documentation needs to be attached to the complaint in order to establish standing at the time of filing, rather than having to meet that burden at a later time during the proceedings. The Eighth and Tenth District Courts of Appeal have ruled that although standing does need to exist at the time the complaint is filed, standing need not be affirmatively proven by supporting documentation appended to the complaint.3 The Ninth District found otherwise, determining that a bank did not have standing at the time of filing the complaint as required by Schwartzwald because the complaint did not include any merger or name change documents evidencing the bank’s line of succession from the original lender, even though the merger occurred before the complaint was filed and the complaint expressly referenced the merger.4 Continue Reading

Final IRS Regulations Issued on Restricted Stock Grants

Posted in Employment and Compensation Law, Tax Law

Restricted stock grants have been a popular executive compensation component for over a decade now. With a restricted stock grant, the employer gives shares of stock to the employee, but subject to two main conditions. One condition is a vesting condition, which generally requires the employee to remain continuously employed with the employer for a period of years, satisfy performance targets, or both. If the employee fails to satisfy the vesting requirements, the employee forfeits the stock. The other condition is that during the vesting period, the employee is prohibited from selling or otherwise transferring the stock.

Restricted stock is popular because it provides a link between the performance of the company and the compensation of the employee. At the same time, unless a complete disaster occurs, the employee generally is guaranteed of receiving some payment because the compensation is equal to the value of the stock, rather than only the appreciation in the value of the stock. In a turbulent economy, that protection is valued by employees.

With any executive compensation arrangement, however, it is important to consult the tax rules. Generally, the value of the stock to the employee who receives a restricted stock grant is not taxed until the earlier of when the stock becomes either no longer subject to a substantial risk of forfeiture (i.e., vested), or when the stock becomes transferable. The IRS and Treasury recently issued final regulations that “clarify” the types of conditions that the IRS will respect as imposing a substantial risk of forfeiture. The clarifications stress that vesting conditions will impose a substantial risk of forfeiture only if they require completion of a period of service, or satisfaction of performance goals, and that it is not a certainty that these conditions will be satisfied.

In some ways, the “clarifications” feel more like new rules than clarifications of existing rules. The IRS, however, says that it has always interpreted the applicable regulations this way. Over time, it has seen employers try to use other types of vesting conditions, such as clawback provisions and insider trading policies, when granting these awards. The IRS felt that it was worth publishing that these conditions, by themselves, will not impose a substantial risk of forfeiture. Unless other service or performance-based vesting requirements apply to the awards, the restricted stock would be immediately taxable upon the date of grant.

The good news is that most restricted stock agreements should be written in a manner consistent with the recent clarifications. It may still be worth reviewing any outstanding agreements to make sure they do not contain any unpleasant tax surprises. To learn more about these clarifications, we invite you to read the following blogs that describe these issues in more detail:

“Substantial Risk of Forfeiture” Clarification Impacts Restricted Property (Stock) Grants

Substantial risk of forfeiture guidance clarifies when Section 16 short-swing profit liability can defer taxation of equity compensation awards


Ohio IOLTA and IOTA Provide CRA Consideration

Posted in CRA, Regulation and Compliance

Editor’s Note:

This post was prepared by Susan A. Choe, Deputy Director & General Counsel, The Ohio Legal Assistance Foundation.

Federal bank examiners will now provide positive CRA consideration under the investment test for interest paid above the market rate on Ohio IOLTAs (“interest on lawyer trust accounts”) and IOTAs (“interest on title agent trust accounts”). This development was confirmed by the Cleveland office of the Office of the Comptroller of the Currency and representatives of the Federal Reserve Bank of Cleveland.  Confirmation was sought by the Ohio Legal Assistance Foundation to reinforce support for Ohio’s legal aids during a time of declining revenues and increased demand for legal aid.

Since the mid-1980’s, IOLTAs and IOTAs have been used to fund civil legal aid for Ohioans who cannot afford an attorney. In this way, civil legal aid ensures fairness in the justice system regardless of how much money a person has.

For more information on CRA investment credits related to IOLTA or IOTA accounts, please contact Susan Choe, Esq., Deputy Director and General Counsel for the Ohio Legal Assistance Foundation, by email to schoe@olaf.org.