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Summer 2012

SEC Deregistration

On April 5, 2012, the Jumpstart Our Business Startups Act (JOBS Act) was signed into law. The JOBS Act increased the threshold number of record shareholders of a class of equity securities that triggers registration and reporting requirements under Section 12(g) of the Securities Exchange Act of 1934 (Exchange Act). For banks and bank holding companies (banks) with assets of more than $10 million, this threshold number is increased from 500 to 2,000.

Additionally, the JOBS Act increased the threshold number of shareholders of record below which a bank reporting to the Securities and Exchange Commission (SEC) may suspend its reporting obligations. Under the JOBS Act, a bank may now suspend its reporting obligations with the SEC (i.e., "deregister" or "go dark") with regard to any class of securities that is held of record by fewer than 1,200 people. Read more.

Vital Relationships

Financial institutions increasingly look to vendor relationships, including all types of third-party relationships with service providers, as a way to gain a competitive advantage. Vendors can offer institutions a variety of safe and secure opportunities to improve overall success by, for example, reducing costs, performing functions on the institution’s behalf and providing products and services that the institution does not offer.

Reliance on vendor relationships, however, can significantly increase a financial institution’s risk profile. Each institution's risk profile is unique and commands a tailored risk mitigation approach appropriate for the scale of its particular vendor relationships, the materiality of the risks present and the ability of the institution to manage those risks. A financial institution's responsibilities to properly manage vendor relationships and identify and control the risks arising from such relationships lie with its board of directors and senior management. Failure to adequately manage vendor risks leaves a financial institution exposed to regulatory action, financial loss, litigation and damage to its reputation. Read more.   

FDIC Warning

As we have previously noted, bank officers, directors and legal counsel should pay heed to the FDIC's warning in its Financial Institution Letter dated March 19, 2012 (FIL-14-2012), that copying and removing financial institution and supervisory records from an institution "… is a breach of their fiduciary duty to the institution and an unsafe and unsound banking practice, which may also violate applicable laws and regulations … ." Read more.

If you have an idea for an article you would like us to pursue, please contact your Vorys attorney. We hope you enjoy the read.

About the Vorys Banking Group

Our nearly 20 lawyers dedicated to our banking practice have hundreds of years of combined practical, hands-on experience in the industry. We have been named a "Top Lead Legal Advisor" by American Banker magazine, and a Go-To Law Firm® in banking and finance, securities and corporate transactions by Fortune 500 general counsel. We represent public and non-public institutions, from community banks and thrifts to large, multinational financial institutions throughout the United States. Our clients have been in Ohio, Washington, D.C., Maryland, Virginia, Arizona, Florida, Indiana, Michigan, Kentucky, Missouri, New York, North Carolina, South Carolina and West Virginia. Our team includes two former general counsels for major bank holding companies; their insight has been invaluable to our clients. We assist our clients with bank, thrift and holding company formations; securities law compliance; board governance; enforcement actions with state and federal agencies; M&A and divestitures; capitalization, recapitalization and private equity transactions; employment law matters; executive compensation and benefit plans; tax matters; and the negotiation of all types of contracts. We also represent financial institutions, other institutional lenders and borrowers in all types of complex commercial financings.

This magazine is for general information purposes and should not be regarded as legal advice.



Aaron S. Berke

Elizabeth Turrell Farrar

Sheila Nolan Gartland

Jason L. Hodges

Michael D. Martz

Kimberly J. Schaefer

Jeffery E. Smith

J. Bret Treier

Anthony D. Weis



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This alert is for general information purposes and should not be regarded as legal advice. As always, please let us know if you want more information or have questions about how these developments apply to your situation.