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65-689: McCarthy Tétrault is the only law firm listed in the Report on Business Top 25 Best B2B Brands by The Globe and Mail in 2021, and it has the second strongest law firm brand in Canada according to Thomson Reuters’ Regional Law Firm Brand Indexes 2021. The firm represents Canadian and international clients, including major public institutions, financial services organizations, mining companies , manufacturers, pharmaceutical companies and other corporations. McCarthy Tétrault's London office specializes in assisting clients with their transatlantic transactions, and

130-542: A commercial bank , and an insurance company . With the passage of the Gramm – Leach – Bliley Act, commercial banks, investment banks, securities firms, and insurance companies were allowed to consolidate. Furthermore, it failed to give to the SEC or any other financial regulatory agency the authority to regulate large investment bank holding companies. The legislation was signed into law by President Bill Clinton . A year before

195-452: A broad range of service sector activities, especially as concerns financial management and consumer finance . The finance industry in its most common sense concerns commercial banks that provide market liquidity , risk instruments , and brokerage for large public companies and multinational corporations at a macroeconomic scale that impacts domestic politics and foreign relations . The extragovernmental power and scale of

260-485: A business, helps businesses raise money from other firms in the form of bonds (debt) or share capital (equity). The primary operations of commercial banks include: The United States is the largest commercial banking services location. New York City and London are the largest centers of investment banking services. NYC is dominated by U.S. domestic business, while in London international business and commerce make up

325-462: A commercial/retail bank ultimately drove the banking industry to back the GLBA restrictions. Some restrictions remain to provide some amount of separation between the investment and commercial banking operations of a company. For example, licensed bankers must have separate business cards, e.g., "Personal Banker, Wells Fargo Bank" and "Investment Consultant, Wells Fargo Private Client Services". Much of

390-486: A few years earlier, commercial Banks were allowed to pursue investment banking, and before that banks were also allowed to begin stock and insurance brokerage. Insurance underwriting was the only main operation they weren't allowed to do, something rarely done by banks even after the passage of the Act. The Act further enacted three provisions that allow for bank holding companies to engage in physical commodity activities. Prior to

455-462: A joint conference committee to work out the differences between the Senate and House versions. Democrats agreed to support the bill after Republicans agreed to strengthen provisions of the anti-redlining Community Reinvestment Act and address certain privacy concerns; the conference committee then finished its work by the beginning of November. On November 4, the final bill resolving the differences

520-447: A large branch and backshop footprint. Banks have recently tended to buy other banks, such as the 2004 Bank of America and Fleet Boston merger, yet they have had less success integrating with investment and insurance companies. Many banks have expanded into investment banking , but have found it hard to package it with their banking services, without resorting to questionable tie-ins which caused scandals at Smith Barney . Crucial to

585-602: A limit of 18% (the minimum usury limit in Texas) or more on all other loans. However, once Wells Fargo fully completed its purchase of Century Bank (a Texas bank with Arkansas branches), Section 731 did away with all usury limits for Arkansas-based banks since Wells Fargo's main bank charter is based in South Dakota , which repealed its usury laws many years ago. Though designed for Arkansas, Section 731 may also apply to Alaska and California whose constitutions provide for

650-407: A privacy notice at the time the consumer relationship is established and annually thereafter. The privacy notice must explain the information collected about the consumer, where that information is shared, how that information is used, and how that information is protected. The notice must also identify the consumer's right to opt out of the information being shared with unaffiliated parties pursuant to

715-458: A risk analysis on their current processes. The Federal Register features approaches for risk assessments such as evaluating the likelihood of magnitudes of harm that result from threats and errors and safeguards are commensurate with the risks they address. No process is perfect, so this has meant that every financial institution has had to make some effort to comply with the GLBA . In December 2021,

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780-530: A significant portion of investment banking activity. FX or Foreign exchange services are provided by many banks and specialists foreign exchange brokers around the world. Foreign exchange services include: London handled 36.7% of global currency transactions in 2009 – an average daily turnover of US$ 1.85 trillion – with more US dollars traded in London than New York, and more Euros traded than in every other city in Europe combined. New York City

845-580: A variety of reasons. Some smaller financial centres, such as Bermuda , Luxembourg , and the Cayman Islands , lack sufficient size for a domestic financial services sector and have developed a role providing services to non-residents as offshore financial centres . The increasing competitiveness of financial services has meant that some countries, such as Japan, which were once self-sufficient, have increasingly imported financial services. The leading financial exporter, in terms of exports less imports,

910-446: A written information security plan that describes how the company is prepared for, and plans to continue to protect its clients' nonpublic personal information. The Safeguards Rule applies to information of any consumer's past or present regarding the financial institution's products or services. The written plan must include: The Safeguards Rule forces financial institutions to take a closer look at how they manage private data and to do

975-469: Is a consumer who has a "customer relationship" with a financial institution. A "customer relationship" is a continuing relationship with a consumer. Examples of establishing a customer relationship: "Special Rule" for Loans: The customer relationship travels with ownership of the servicing rights. Under the GLB , financial institutions must provide their clients a privacy notice that explains what information

1040-562: Is legal under the usury laws of any of those states may be made by an Arkansas-based bank under Section 731. The section does not apply to interstate banks with branches in the covered state, but headquartered elsewhere; however, Arkansas-based interstate banks like Arvest Bank may export their Section 731 limits to other states. Due to Section 731, it is generally regarded that Arkansas-based banks now have no usury limit for credit cards or for any loan of greater than $ 2,000 (since Alabama, Regions' home state, has no limits on those loans), with

1105-608: Is staffed with both English and Canadian-qualified lawyers. A charter member of the Canada-UK Chamber of Commerce, it provides services in Europe, Africa and the Middle East. The firm had its origin in the formation of Boulton & McCarthy in Barrie, Ontario , of which Dalton McCarthy was a co-founder. It would later become McCarthy & McCarthy upon the admission of his son Leighton McCarthy . McCarthy Tétrault

1170-877: Is the United Kingdom , which had $ 95 billion of financial exports in 2014. The UK's position is helped by both unique institutions (such as Lloyd's of London for insurance, the Baltic Exchange for shipping etc.) and an environment that attracts foreign firms; many international corporations have global or regional headquarters in the London and are listed on the London Stock Exchange , and many banks and other financial institutions operate there or in Edinburgh . Gramm-Leach-Bliley Act The Gramm–Leach–Bliley Act ( GLBA ), also known as

1235-600: Is the largest center of investment services, followed by London. The United States, followed by Japan and the United Kingdom are the largest insurance markets in the world. A financial export is a financial service provided by a domestic firm (regardless of ownership) to a foreign firm or individual. While financial services such as banking, insurance, and investment management are often seen as domestic services, an increasing proportion of financial services are now being handled abroad, in other financial centres , for

1300-408: Is traditionally among those to receive government support in times of widespread economic crisis. Such bailouts, however, enjoy less public support than those for other industries. A commercial bank is what is commonly referred to as simply a bank. The term " commercial " is used to distinguish it from an investment bank , a type of financial services entity which instead of lending money directly to

1365-930: The Arkansas Constitution and could not be changed by the Arkansas General Assembly . When the Office of the Comptroller of the Currency ruled that interstate banks established under the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 could use their home state's usury law for all branches nationwide with minimal restrictions, Arkansas-based banks were placed at a severe competitive disadvantage to Arkansas branches of interstate banks; this led to out-of-state takeovers of several Arkansas banks, including

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1430-554: The Federal Reserve gave Citigroup a temporary waiver in September 1998. Less than a year later, GLBA was passed to legalize these types of mergers on a permanent basis. The law also repealed Glass–Steagall's conflict of interest prohibitions "against simultaneous service by any officer, director, or employee of a securities firm as an officer, director, or employee of any member bank." The banking industry had been seeking

1495-491: The Financial Services Act of 1999 on July 1, 1999, by a bipartisan vote of 343–86 (Republicans 205–16; Democrats 138–69; Independent 0–1), two months after the Senate had already passed its version of the bill on May 6 by a much narrower 54–44 vote along basically partisan lines (53 Republicans and 1 Democrat in favor; 44 Democrats opposed). When the two chambers could not agree on a joint version of

1560-626: The Financial Services Modernization Act of 1999 , ( Pub. L.   106–102 (text) (PDF) , 113  Stat.   1338 , enacted November 12, 1999 ) is an act of the 106th United States Congress (1999–2001). It repealed part of the Glass–Steagall Act of 1933 , removing barriers in the market among banking companies, securities companies, and insurance companies that prohibited any one institution from acting as any combination of an investment bank ,

1625-530: The GDPR as well as US GLBA requirements. Individualized requests for privacy under the GLBA are likely to include provisions guaranteed by the European Union 's GDPR . (Subtitle A: Disclosure of Nonpublic Personal Information, codified at 15 U.S.C.   §§ 6801 – 6809 ) The Safeguards Rule implements data security requirements from the GLBA and requires financial institutions to develop

1690-420: The GDPR includes provision on scope of data collection, but also includes right of access , right to erasure , right to restriction of processing and right to data portability. Due to the multinational nature of some transactions, including data and internet transactions, and the possible implementation of corresponding regulations in some US states, it is likely that business and other entities will comply with

1755-433: The GLB depending upon the type of business and the activities utilizing individual's personal nonpublic information. Definition: A "consumer" is an individual who obtains or has obtained a financial product or service from a financial institution that is to be used primarily for personal, family, or household purposes, or that individual's legal representative. Examples of consumer relationships: Definition: A "customer"

1820-426: The GLB . A customer is not someone using an automated teller machine (ATM) or having a check cashed at a cash advance business. These are not ongoing relationships like a customer might have—i.e., a mortgage loan , tax advising, or credit financing. A business is not an individual with personal nonpublic information, so a business cannot be a customer under the GLB . A business, however, may be liable for compliance to

1885-534: The United States partly as a result of the Gramm–Leach–Bliley Act of the late 1990s, which enabled different types of companies operating in the U.S. financial services industry at that time to merge. Companies usually have two distinct approaches to this new type of business. One approach would be a bank that simply buys an insurance company or an investment bank , keeps the original brands of

1950-478: The Gramm–Leach–Bliley Act softened the impact of the crisis. Atlantic Monthly columnist Megan McArdle has argued that if the act was "part of the problem, it would be the commercial banks, not the investment banks, that were in trouble" and repeal would not have helped the situation. An article in the conservative publication National Review has made the same argument, calling allegations about

2015-876: The Safeguards Rule was updated, amid some controversy, by the FTC to include specific criteria requiring financial institutions to introduce new security controls and to increase the accountability of boards of directors , with a six-month compliance extension, from January to June 2023, granted for some types of institutions in November 2022. (Subtitle B: Fraudulent Access to Financial Information, codified at 15 U.S.C.   §§ 6821 – 6827 ) Pretexting (sometimes referred to as "social engineering") occurs when someone tries to gain access to personal nonpublic information without proper authority to do so. This may entail requesting private information while impersonating

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2080-468: The [initial] effort to "develop" the curriculum for such employee training. Under United States law, pretexting by individuals is punishable as a common law crime of false pretenses . Section 731 of the GLB, codified as subsection (f) of 12 U.S.C.   § 1831u , contains a unique provision aimed at Arkansas , whose usury limit was set at five percent above the Federal Reserve discount rate by

2145-483: The account holder, by telephone, by mail, by e-mail, or even by " phishing " (i.e., using a phony website or email to collect data). GLBA encourages the organizations covered by GLBA to implement safeguards against pretexting. For example, a well-written plan designed to meet GLB's Safeguards Rule ("develop, monitor, and test a program to secure the information") would likely include a section on training employees to recognize and deflect inquiries made under pretext. In fact,

2210-546: The acquired firm, and adds the acquisition to its holding company simply to diversify its earnings . Outside the U.S. (e.g. Japan ), non-financial services companies are permitted within the holding company. In this scenario, each company still looks independent and has its own customers, etc. In the other style, a bank would simply create its own insurance division or brokerage division and attempt to sell those products to its own existing customers, with incentives for combining all things with one company. The financial sector

2275-611: The bill was Rep. Thomas J. Bliley, Jr. (R-Virginia), Chairman of the House Commerce Committee from 1995 to 2001. During debate in the House of Representatives , Rep. John Dingell ( Democrat of Michigan) argued that the bill would result in banks becoming "too big to fail." Dingell further argued that this would necessarily result in a bailout by the Federal Government. The House passed its version of

2340-473: The bill, the House voted on July 30 by a vote of 241–132 (R 58–131; D 182–1; Ind. 1–0) to instruct its negotiators to work for a law which ensured that consumers enjoyed medical and financial privacy as well as "robust competition and equal and non-discriminatory access to financial services and economic opportunities in their communities" (i.e., protection against exclusionary redlining ). The bill then moved to

2405-502: The charge in offering all types of financial services products in 1986. American Express attempted to own participants in almost every field of financial business (although there was little synergy among them). Things culminated in 1998 when Citibank merged with The Travelers Companies , creating Citigroup . The merger violated the Bank Holding Company Act (BHCA), but Citibank was given a two-year forbearance that

2470-403: The client to read or scroll through the notice and check a box to accept terms. The privacy notice must also explain to the customer the opportunity to 'opt out'. Opting out means that the client can say "no" to allowing their information to be shared with nonaffiliated third parties. The Fair Credit Reporting Act is responsible for the 'opt-out' opportunity, but the privacy notice must inform

2535-443: The company gathers about the client, where this information is shared, and how the company safeguards that information. This privacy notice must be given to the client prior to entering into an agreement to do business. There are exceptions to this when the client accepts a delayed receipt of the notice in order to complete a transaction on a timely basis. This has been somewhat mitigated due to online acknowledgement agreements requiring

2600-482: The creation of giant financial supermarkets that could own investment banks, commercial banks and insurance firms, something banned since the Great Depression. Its passage, critics also say, cleared the way for companies that were too big and intertwined to fail . Economist Joseph Stiglitz has also argued that the Act increased risk-taking leading up to the crisis, stating "the culture of investment banks

2665-546: The customer of this right under the GLB. The client cannot opt out of: Notice requirements may vary. In most cases, service of a GLBA notice is not necessary unless the entity serving the notice intends to "share" customer information, which the FTC defines as, "non-public personal information (NPI)", of customers required to be protected under GLBA . A consumer may react to service of a GLBA notice by: The European Union's General Data Protection Regulation (GDPR) became enforceable on 25 May 2018. As applies to consumers,

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2730-1136: The debate about financial privacy is specifically centered around allowing or preventing the banking, brokerage, and insurances divisions of a company from working together. In terms of compliance , the key rules under the Act include The Financial Privacy Rule which governs the collection and disclosure of customers' personal financial information by financial institutions. It also applies to companies, regardless of whether they are financial institutions, that receive such information. The Safeguards Rule requires all financial institutions to design, implement and maintain safeguards to protect customer information. The Safeguards Rule applies not only to financial institutions that collect information from their own customers, but also to financial institutions – such as credit reporting agencies, appraisers, and mortgage brokers – that receive customer information from other financial institutions. (Subtitle A: Disclosure of Nonpublic Personal Information, codified at 15 U.S.C.   §§ 6801 – 6809 ) The Financial Privacy Rule requires financial institutions to provide each consumer with

2795-456: The economy turns bad. With the new Act, they would be able to do both 'savings' and 'investment' at the same financial institution, which would be able to do well in both good and bad economic times. Prior to the Act, most financial services companies were already offering both saving and investment opportunities to their customers. On the retail/consumer side, a bank called Norwest Corporation , which would later merge with Wells Fargo Bank , led

2860-430: The enactment of the Act those activities were limited to those that were so closely related to banking to be considered incidental to it. Under GLBA depending on the provision the institution falls into, bank holding companies can engage in physical commodity trading, energy tolling, energy management services, and merchant banking activities. Much consolidation occurred in the financial services industry since, but not at

2925-410: The evaluation of the effectiveness of such employee training probably should include a follow-up program of random spot checks, "outside the classroom", after completion of the [initial] employee training, in order to check on the resistance of a given (randomly chosen) student to various types of "social engineering"—perhaps even designed to focus attention on any new wrinkle that might have arisen after

2990-413: The few banks that did merge weathered the crisis better than those that did not. In February 2009, one of the act's co-authors, former Senator Phil Gramm, also defended his bill: [I]f GLB was the problem, the crisis would have been expected to have originated in Europe where they never had Glass–Steagall requirements to begin with. Also, the financial firms that failed in this crisis, like Lehman , were

3055-774: The finance industry remains an ongoing controversy in many industrialized Western economies, as seen in the American Occupy Wall Street civil protest movement of 2011. Styles of financial institution include credit union , bank , savings and loan association , trust company , building society , brokerage firm , payment processor , many types of broker , and some government-sponsored enterprise . Financial services include accountancy , investment banking , investment management , and personal asset management . Financial products include insurance , credit cards , mortgage loans , and pension funds . The term "financial services" became more prevalent in

3120-775: The financial privacy rule provides for a privacy policy agreement between the company and the consumer pertaining to the protection of the consumer's personal nonpublic information. On November 17, 2009, eight federal regulatory agencies released the final version of a model privacy notice form to make it easier for consumers to understand how financial institutions collect and share information about consumers. GLBA defines financial institutions as: "companies that offer financial products or services to individuals, like loans, financial or investment advice, or insurance". The Federal Trade Commission (FTC) has jurisdiction over financial institutions similar to, and including, these: These companies must also be considered significantly engaged in

3185-440: The financial service or production that defines them as a "financial institution". Insurance has jurisdiction first by the state, provided the state law at minimum complies with the GLB. State law can require greater compliance, but not less than what is otherwise required by the GLB. The Gramm–Leach–Bliley Act defines a "consumer" as A customer is a consumer that has developed a relationship with privacy rights protected under

3250-496: The law was passed, Citicorp , a commercial bank holding company , merged with the insurance company Travelers Group in 1998 to form the conglomerate Citigroup , a corporation combining banking, securities and insurance services under a house of brands that included Citibank , Smith Barney , Primerica , and Travelers . Because this merger was a violation of the Glass–Steagall Act and the Bank Holding Company Act of 1956 ,

3315-563: The least diversified and the ones that survived, like J.P. Morgan , were the most diversified. Moreover, GLB did not deregulate anything. It established the Federal Reserve as a superregulator, overseeing all Financial Services Holding Companies. All activities of financial institutions continued to be regulated on a functional basis by the regulators that had regulated those activities prior to GLB. Bill Clinton , as well as economists Brad DeLong and Tyler Cowen have all argued that

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3380-413: The legislation feared that, with the allowance for mergers between investment and commercial banks, GLBA allowed the newly-merged banks to take on riskier investments while at the same time removing any requirements to maintain enough equity, exposing the assets of its banking customers. Calabria claimed that, prior to the passage of GLBA in 1999, investment banks were already capable of holding and trading

3445-503: The passing of this Act was an amendment made to the GLBA, stating that no merger may go ahead if any of the financial holding institutions, or affiliates thereof, received a "less than satisfactory [ sic ] rating at its most recent CRA exam", essentially meaning that any merger may only go ahead with the strict approval of the regulatory bodies responsible for the Community Reinvestment Act (CRA). This

3510-492: The provisions of the Fair Credit Reporting Act . Should the privacy policy change at any point in time, the consumer must be notified again for acceptance. Each time the privacy notice is reestablished, the consumer has the right to opt out again. The unaffiliated parties receiving the nonpublic information are held to the acceptance terms of the consumer under the original relationship agreement. In summary,

3575-606: The repeal of the 1933 Glass–Steagall Act since the 1980s, if not earlier. In 1987 the Congressional Research Service prepared a report that explored the cases for and against preserving the Glass–Steagall Act. Respective versions of the Financial Services Act were introduced in the U.S. Senate by Phil Gramm ( Republican of Texas) and in the U.S. House of Representatives by Jim Leach (R-Iowa). The third lawmaker associated with

3640-535: The sale of First Commercial Bank (then Arkansas' largest bank) to Regions Financial Corporation in 1998. Under Section 731, all banks headquartered in a state covered by that law may charge up to the highest usury limit of any state that is headquarters to an interstate bank which has branches in the covered state. Therefore, since Arkansas has branches of banks based in Alabama , Georgia , Mississippi , Missouri , North Carolina , Ohio , and Texas , any loan that

3705-515: The same basic usury limit, though unlike Arkansas their legislatures can (and generally do) set different limits. If Section 731 applies to those states, then all their usury limits are inapplicable to banks based in those states, since Wells Fargo has branches in both states. The act is often cited as a cause of the 2007 subprime mortgage financial crisis "even by some of its onetime supporters." Former President Barack Obama has stated that GLBA led to deregulation that, among other things, allowed for

3770-429: The scale some had expected. Retail banks, for example, do not tend to buy insurance underwriters, as they seek to engage in a more profitable business of insurance brokerage by selling products of other insurance companies. Other retail banks were slow to market investments and insurance products and package those products in a convincing way. Brokerage companies had a hard time getting into banking, because they do not have

3835-428: The very financial assets claimed to be the cause of the mortgage crisis, and were also already able to keep their books as they had. He concluded that greater access to investment capital as many investment banks went public on the market explains the shift in their holdings to trading portfolios. Calabria noted that after GLBA passed, most investment banks did not merge with depository commercial banks, and that in fact,

3900-612: Was an issue of hot contention, and the Clinton Administration stressed that it "would veto any legislation that would scale back minority-lending requirements." GLBA also did not remove the restrictions on banks placed by the Bank Holding Company Act of 1956 which prevented financial institutions from owning non-financial corporations. It conversely prohibits corporations outside of the banking or finance industry from entering retail and/or commercial banking. Many assume Wal-Mart 's desire to convert its industrial bank to

3965-546: Was based on an assumption that they would be able to force a change in the law. The Gramm–Leach–Bliley Act passed in November 1999, repealing portions of the BHCA and the Glass–Steagall Act, allowing banks, brokerages, and insurance companies to merge, thus making the CitiCorp/Travelers Group merger legal. Also prior to the passage of the Act, there were many relaxations to the Glass–Steagall Act . For example,

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4030-581: Was challenged as being contrary to the mobility rights protected by the Charter of Rights and Freedoms . In the resulting court case, Black v. Law Society of Alberta , the Supreme Court of Canada struck down the rules. The subsequent merger made McCarthy Tétrault Canada's first national law firm. Financial services Financial services are economic services tied to finance provided by financial institutions . Financial services encompass

4095-562: Was conveyed to commercial banks and everyone got involved in the high-risk gambling mentality". In an article in The Nation , Mark Sumner asserted that the Gramm–Leach–Bliley Act was responsible for the creation of entities that took on more risk due to their being considered " too big to fail ". According to a 2009 policy report from the Cato Institute authored by one of the institute's directors, Mark A. Calabria , critics of

4160-528: Was created through the merger McCarthy & McCarthy of Toronto, Clarkson Tétrault of Montreal, Shrum Liddle & Hebenton of Vancouver, and Black & Company of Calgary. This merger was initially denied by the Law Society of Alberta , which enacted rules designed to stop it. The rules prohibited members from entering into a partnership with anyone who was not a resident of Alberta , and prohibited members from being partners of more than one firm. This rule

4225-413: Was passed by the Senate 90–8, and by the House 362–57. The legislation was signed into law by President Bill Clinton on November 12, 1999. Many of the largest banks, brokerages, and insurance companies desired the Act at the time. The justification was that individuals usually put more money into investments when the economy is doing well, but they put most of their money into savings accounts when

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