Wachtell Publishes Financial Institutions M&A Guide for 2024

Editor’s Note: This post contains excerpts from Wachtell, Lipton, Rosen & Katz’s Guide: “Financial Institutions M&A 2024: Seizing Opportunities, Navigating Pitfalls,” the full version of which is available here. 

by Ed Herlihy, Richard Kim, Nick Demmo, David Shapiro, Matt Guest, Mark Veblen, Brandon Price, and Jake Kling

Photos of the authors

Top left to right: Ed Herlihy, Richard Kim, Nick Demmo, and David Shapiro
Bottom left to right: Matt Guest, Mark Veblen, Brandon Price, and Jake Kling
(Photos courtesy of Wachtell, Lipton, Rosen & Katz)

KEY TRENDS IN FINANCIAL INSTITUTIONS M&A DURING 2023

I. M&A FALLS FOR A SECOND CONSECUTIVE YEAR OWING TO GEOPOLITICAL, MACROECONOMIC AND REGULATORY FACTORS

Financial institutions M&A fell for the second year in a row in 2023. Like most other sectors of the economy, financial institutions faced significant M&A headwinds during the year, including geopolitical instability, elevated inflation, high interest rates, challenging and often volatile equity markets, enhanced antitrust risks and uncertainty, and recessionary fears that softened only towards the end of the year.

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Maryland Legislature Passes State Privacy Bill with Robust Requirements and Broad Threshold for Application

by Marshall Mattera and Amanda Pervine

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Marshall J. Mattera (photo courtesy of Hunton Andrews Kurth)

The Maryland legislature recently passed the Maryland Online Data Privacy Act of 2024 (“MODPA”), which was delivered to Governor Wes Moore for signature and, if enacted, will impose robust requirements with respect to data minimization, the protection of sensitive data, and the processing and sale of minors’ data.

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Registration Open for PCCE’s 4th Annual Directors’ Academy

NYU Campus

We are pleased to announce that registration is open for our 4th Annual Directors’ Academy at NYU School of Law on October 31st and November 1st, 2024. The agenda and registration portal are available here. The program is for directors who currently serve on public and for-profit private company boards, as well as C-Suite legal, risk, ethics, audit, and compliance professionals.[1] 

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Consumer Facing Applications: A Quote Book from the Tech Summit on AI

by Staff at the Federal Trade Commission’s Office of Technology

Federal Trade Commission

The FTC’s Tech Summit on AI[1] convened three panels that highlighted different layers of the AI tech stack: hardware and infrastructure, data and models, and consumer-facing applications. This third Quote Book is focused on consumer-facing applications. This post outlines the purpose of the quote book, a summary of the panel, and relevant topics and actions raised by the FTC.

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Mitigating AI Risks for Customer Service Chatbots

by Avi Gesser, Jim Pastore, Matt Kelly, Gabriel Kohan, Melissa Muse and Joshua A. Goland  

photos of authors

Top left to right: Avi Gesser, Jim Pastore, and Matt Kelly. Bottom left to right: Gabriel Kohan, Melissa Muse and Joshua A. Goland (photos courtesy of Debevoise & Plimpton LLP)

Online customer service chatbots have been around for years, allowing companies to triage customer queries with pre-programmed responses that addressed customers’ most common questions. Now, Generative AI (“GenAI”) chatbots have the potential to change the customer service landscape by answering a wider variety of questions, on a broader range of topics, and in a more nuanced and lifelike manner. Proponents of this technology argue companies can achieve better customer satisfaction while reducing costs of human-supported customer service. But the risks of irresponsible adoption of GenAI customer service chatbots, including increased litigation and reputational risk, could eclipse their promise.

We have previously discussed risks associated with adopting GenAI tools, as well as measures companies can implement to mitigate those risks. In this Debevoise Data Blog post, we focus on customer service chatbots and provide some practices that can help companies avoid legal and reputational risk when adopting such tools.

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Divided FTC Decrees Sweeping Ban of Employment Non-Competes

by Nelson O. Fitts, Michael J. Schobel, and Emily E. Samra

Photos of the authors

Left to right: Nelson O. Fitts, Michael J. Schobel, and Emily E. Samra (photos courtesy of Wachtell, Lipton, Rosen & Katz)

In a recent public meeting, a divided Federal Trade Commission voted along party lines to issue a final rule prohibiting non-compete clauses for nearly all U.S. workers. The FTC previously published the proposed ban in January 2023, drawing thousands of public comments. The final rule hews closely to the initial proposal, but with slightly broader exceptions.

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Sweeping Skeletons Out of the Corporate Closet: “Read Across” and Remediation

by Jonny Frank, Michele Edwards, and Chris Hoyle

photos of the speakers

Left to right: Jonny Frank, Michele Edwards, and Chris Hoyle (photos courtesy of StoneTurn, LLP)

It is tempting for organizations to downplay compliance violations as an isolated event attributable to a few bad apples. However, experience teaches that misconduct is often worse than initially thought. Wrongdoers who confess rarely admit to their complete wrongdoing. And it is common for the same or similar misconduct to occur across business lines and geographies.   

Because wrongdoing is often much more extensive than originally believed, organizations cannot afford to assume that an incident is an isolated event. Imagine the legal implications—and embarrassment—if the government, public or other stakeholders discover that an organization’s internal investigation failed to detect the full extent of the perpetrators’ wrongdoing or similar schemes committed by others in the organization. There may also be more extensive financial losses to recover that the organization needs to be aware of.

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EDPB Issues Opinion on Pay-Or-Consent Models

by Olivia Lee and Ashley Webber

Photos of the authors

From left to right: Olivia Lee and Ashley Webber (Photos courtesy of Hunton Andrews Kurth LLP)

On April 17, 2024, the European Data Protection Board (“EDPB”) adopted its non-binding Opinion 08/2024 on Valid Consent in the Context of Consent or Pay Models Implemented by Large Online Platforms (the “Opinion”), stating that such models generally are not compliant with the EU General Data Protection Regulation (“GDPR”), though their use should be considered on a case-by-case basis.

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Security Principles: Addressing Vulnerabilities Systematically

by Staff at the Federal Trade Commission’s Office of Technology

Photo of author

Federal Trade Commission

For more than two decades, the FTC has been bringing enforcement actions for violations of national consumer protection laws due to companies’ poor security practices. These poor practices have included failure to encrypt sensitive data, storing credentials in source code, failing to test for common vulnerabilities, and failure to use multi-factor authentication, among others. To remedy these practices, the orders the FTC has obtained in these enforcement actions have required companies to improve their security practices. Last year FTC staff published a blog post on how the agency’s orders incorporate modern security best practices that take inspiration from research into the causes of risk in complex systems. This post is a continuation on the theme of effectively addressing risks in complex systems.

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EPA Announces New Enforcement Policy Requiring Civil-Criminal Coordination

by Steven P. Solow and Chloe Graham

From left to right: Steven P. Solow, and Chloe Graham (Photos courtesy of Baker Botts LLP)

The Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance (OECA) announced a new Strategic Civil-Criminal Enforcement Policy (Policy) that is perhaps the most significant change in environmental enforcement since the passage of the basic environmental laws decades ago. At bottom, the new Policy addresses the long-standing concern that the decision to enforce a matter civilly or criminally ultimately depended on whose “desk” it landed on.

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