Nikhil Gore’s commentary was included in a Law360 article covering the U.S. Supreme Court’s Jarkesy decision. Nikhil discusses how the court’s decision will complicate enforcement for the federal banking agencies.
“The most direct potential effect is on their ability to bring civil money penalty enforcement actions in cases involving alleged breach of fiduciary duty,” Nikhil said. “Of those three categories, fiduciary duty claims have a relatively clear common-law antecedent. That's not to say Jarkesy constitutes a decision that fiduciary duty claims cannot be brought by the OCC, FDIC and Fed before administrative law judges. But it's not a big leap from Jarkesy to that conclusion.”
Nikhil adds that "if an unsafe or unsound practice can cover anything from a traditional fraud to, for example, not having the right testing for some capital model, does that undermine the argument that it can fit within this very specific exception for public rights? That's an interesting question, and it might be another way that people try to argue this issue.”
“In litigated cases,” Nikhil said, “I would anticipate that lawyers defending individuals will raise this [Jarkesy decision] repeatedly in the context of unsafe and unsound practices cases until we get some clarity from the appeals courts.”
Click here to read the full article.
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