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NYDFS Plans to Streamline Supervisory Information Sharing

한국어 번역문은 이곳을 클릭해주시기 바랍니다.

The New York State Department of Financial Services (“DFS”) is proposing new regulation that would allow banks to share confidential supervisory information with their attorneys or an independent auditor without gaining prior approval from the department.

Banks currently need written approval from DFS each time they want to share confidential supervisory information with their advisors. The proposed new regulation would streamline operations by making it easier for banks to share relevant information with their advisors.

Under the new procedures, banks may skip getting approval from the DFS if they meet certain requirements. Notably, there must be a written agreement in place with the advisor in which the advisor agrees to:

  • Maintain confidential all information disclosed;
  • Disclose the information only for the purpose of providing legal representation or auditing services;
  • Limit the disclosure to certain employees, directors, or officers on a “need to know” basis;
  • Notify DFS, promptly and in writing, of any demand or request for the supervisory information, and assert on behalf of DFS all such legal privileges and protections that DFS may request; and
  • Obtain any required prior consent or approval from any other state or federal agency, and executes a statement affirming such consents and approvals were obtained, or if no other consents or approvals are required, so stating.

Banks would also have to maintain a written record of all disclosed confidential supervisory information.

Superintendent Linda Lacewell stated that the purpose of the new regulation was to “ensure [that] the department engages in an open dialogue with the financial services industry,” and that this would be one of the “many steps” that the DFS is taking to “ensure an efficient regulatory structure to assist the industry.”

The proposed regulations are subject to a 60-day comment period once they are published in the state register on November 27, 2019.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume IX, Number 329



About this Author

Robert Friedman, Legal Specialist, business and corporate litigation matters

Mr. Friedman is a partner in the Business Trial and White Collar Practice Groups in the firm's New York office. He heads the Business Trial Practice Group in New York.

Areas of Practice

Mr. Friedman focuses his practice on business and corporate litigation matters. He has particular experience in the areas of securities litigation, internal investigations, corporate trust litigation, real estate litigation, director and officer liability, bankruptcy litigation, restrictive covenants and intellectual property.  He has tried cases involving and counseled...

Harrison Kang Sheppard Mullin Legal Consultant
Associate, Foreign Legal Consultant for U.S. Law

Harrison Kang is an associate and foreign legal consultant in the Business Trial Practice Group in the firm's Seoul and New York offices.

Areas of Practice

Harrison focuses his practice on litigation, cross-border disputes, and internal investigations.  He has represented clients in complex commercial matters, claims brought under the False Claims Act, product liability / toxic torts cases, corporate disputes, government contract bid protests, administrative appeals, arbitration proceedings, government investigations, claims involving legal malpractice, and intellectual property litigation.  He has experience managing and conducting electronic discovery, first-chairing depositions and court hearings, and engaging in motions practice.