NY Business Law Journal a Publication of the Business Law Section of the New York State Bar Association Inside Headnotes 6 (David L
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NYSBA FALL 2008 | VOL. 12 | NO. 2 NY Business Law Journal A publication of the Business Law Section of the New York State Bar Association Inside HeadNotes 6 (David L. Glass) Internet Banking and the Community Reinvestment Act: An Examination of the Proposals to Establish Compliance 8 (Anthony D. Altamuro, Law Student Writing Competition First Place Winner) Auction Rate Securities: Mechanics and Turmoil 16 (Sachin Raval, Law Student Writing Competition Second Place Winner) The Lawyers’ Foreclosure Intervention Network: Addressing Mortgage Foreclosure in New York City 25 (Thomas C. Baxter, Jr. and Michael V. Campbell) Tugboats, Glaucoma and the Check Collection Process 32 (Jay L. Hack) Wrestling the Fire: Climate Change Law in New York State 34 (Nathan Whitehouse) New York Employment Law Update 42 (James R. Grasso) Ethical Issues for Business Lawyers Documents and Lawyers: Oil and Water? 46 (C. Evan Stewart) Intellectual Property in Various Types of Business Transactions 50 (Ralph J. Scola) Preventing the Inevitable: How Thinking About What Might Happen Can Help Ensure That It Won’t 55 (Victoria A. Cundiff) Getting Ready to Sell a Small Business: A Conversation with a Client 71 (Miriam V. Gold) The Role of the Corporate Secretary in Corporate Governance: The View from a U.S. Subsidiary of a Japanese Insurance Company 75 (Yoshikazu Koike) Committee Reports 82 Your key to professional success… A wealth of practical resources at www.nysba.org • Downloadable Forms organized into common The NY Business Law Journal is practice areas also available online • Comprehensive practice management tools • Forums/listserves for Sections and Committees • More than 800 Ethics Opinions • NYSBA Reports – the substantive work of the Association • Legislative information with timely news feeds • Online career services for job seekers and employers • Free access to several case law libraries – exclusively for members Go to www.nysba.org/BusinessLawJournal to access: The practical tools you need. The resources you demand. • Past Issues (2000-present) of the NY Business Available right now. Law Journal* Our members deserve nothing less. • NY Business Law Journal Searchable Index (2000-present) • Searchable articles from the NY Business Law Journal that include links to cites and statutes. This service is provided by Loislaw and is an exclusive Section member benefi t* *You must be a Business Law Section member and logged in to access. Need password assistance? Visit our Web site at www.nysba.org/pwhelp. For questions or log-in help, call (518) 463-3200. For more information on these and many other resources go to www.nysba.org NY BUSINESS LAW JOURNAL Fall 2008 Vol. 12, No. 2 THE BUSINESS LAW SECTION NEW YORK STATE BAR ASSOCIATION in cooperation with PACE UNIVERSITY SCHOOL OF LAW © 2008 New York State Bar Association ISSN 1521-7183 (print) ISSN 1933-8562 (online) Business Law Section—Officers Chair ..................................................................................... James W. Orband Hinman Howard & Kattell, LLP 80 Exchange Street P.O. Box 5250 Binghamton, NY 13901 [email protected] First Vice-Chair ................................................................... Rebecca J. Simmons Sullivan & Cromwell LLP 125 Broad Street New York, NY 10004 [email protected] Second Vice-Chair............................................................... Bruce J. Baker and Fiscal Offi cer Nixon Peabody, LLP 1100 Clinton Square Rochester, NY 14604 [email protected] Secretary ...............................................................................Paul H. Silverman McLaughlin & Stern LLP 260 Madison Avenue, 21st Floor New York, NY 10016 [email protected] 2 NYSBA NY Business Law Journal | Fall 2008 | Vol. 12 | No. 2 Business Law Section Committees Chair Banking Law ........................................................................ Clifford S. Weber Hinman Howard & Kattell, LLP 106 Corporate Park Drive, Suite 317 White Plains, NY 10604 [email protected] Bankruptcy Law .................................................................. Mark S. Tulis Oxman Tulis Kirkpatrick Whyatt & Geiger 120 Bloomingdale Road White Plains, NY 10605 [email protected] Consumer Financial Services............................................. William R. Henrick DealerTrack, Inc. 1111 Marcus Avenue, Suite M04 Lake Success, NY 11042 [email protected] Corporations Law ............................................................... Janet Thiele Geldzahler Sullivan & Cromwell LLP 1701 Pennsylvania Avenue, NW Washington, DC 20006 [email protected] Derivatives and Structured Products Law ...................... Ilene K. Froom JPMorgan Chase Bank, NA 245 Park Avenue, 11th Floor New York, NY 10167 [email protected] Franchise, Distribution and Licensing Law .................... Thomas M. Pitegoff Pitegoff Law Offi ce Ten Bank Street, Suite 540 White Plains, NY 10606-1933 [email protected] Insurance Law ..................................................................... Robert M. Yellen AIG Executive Liability 175 Water Street, 10th Floor New York, NY 10038 [email protected] NYSBA NY Business Law Journal | Fall 2008 | Vol. 12 | No. 2 3 Legislative Affairs ............................................................... Peter W. LaVigne Sullivan & Cromwell LLP 125 Broad Street New York, NY 10004-2498 [email protected] Membership ......................................................................... Andrea M. Elder-Howell Sempra Energy Trading Corp. 58 Commerce Drive Stamford, CT 06902 [email protected] Public Utility Law ............................................................... Deborah Michele Franco Cullen & Dykman 100 Quentin Roosevelt Boulevard Garden City, NY 11530-4874 [email protected] Securities Regulation .......................................................... Jeffrey W. Rubin Hogan & Hartson LLP 875 Third Avenue New York, NY 10022 [email protected] Technology and Venture Law ............................................Steven R. Masur MasurLaw 101 East 15th Street, 2nd Floor New York, NY 10003 [email protected] 4 NYSBA NY Business Law Journal | Fall 2008 | Vol. 12 | No. 2 NY BUSINESS LAW JOURNAL Editor-in-Chief David L. Glass, Adjunct Professor, Pace University School of Law Managing Editor James D. Redwood, Professor of Law, Albany Law School Editorial Advisory Board Chair Dean Michelle Simon, Pace University School of Law Advisor Emeritus Stuart B. Newman, Salon Marrow, Dyckman & Newman LLP Members Professor Horace Anderson, Pace University School of Law Frederick G. Attea, Phillips, Lytle, Hitchcock, Blaine & Huber LLP Peter Clapman, Director of the Pace Law School Directors’ Institute Adjunct Professor Stephen Cooper, Weil, Gotshal & Manges (retired) Professor James Fishman, Pace University School of Law Adjunct Professor David L. Glass, Macquarie Holdings (USA) Inc. Richard E. Gutman, Exxon Mobil Corporation Professor Ronald Jensen, Pace University School of Law Guy P. Lander, Carter Ledyard & Milburn LLP Raymond Seitz, Phillips, Lytle, Hitchcock, Blaine & Huber LLP Adjunct Professor John Vasily, Debevoise & Plimpton Research Assistants Megan Burke Ann M. McGrath NYSBA NY Business Law Journal | Fall 2008 | Vol. 12 | No. 2 5 HeadNotes I am pleased to announce the winners of our Law Yet another ramifi cation Student Writing Competition. Both of our winners have of the current credit crisis is contributed articles that are especially timely in light of explored by Thomas Baxter, the current turmoil in the fi nancial markets. Executive Vice President and General Counsel, and First Prize, a check for $1,500 and the lead position in Michael Campbell, Assistant this issue, goes to Anthony Altamuro, a student at Pace Vice President and Coun- University School of Law, for “Internet Banking and the sel, of the Federal Reserve Community Reinvestment Act: An Examination of the Bank of New York. In “The Proposals to Establish Compliance.” The Community Lawyers’ Foreclosure Inter- Reinvestment Act (CRA), enacted in 1977, was designed vention Network: Address- to assure that banks and other FDIC-insured institutions ing Mortgage Foreclosure reinvest, primarily by making home mortgage and other in New York City,” Messrs. credit available, in the communities from which they Baxter and Campbell derive their deposits. Although it applies to all FDIC- discuss an initiative undertaken earlier this year by their insured depositories, over time the focus of CRA compli- Bank and the City Bar Justice Center, and supported by ance increasingly has been on inner city communities, the Business Law Section of the NYSBA, to assist dis- and some have alleged that CRA and its advocates con- tressed homeowners facing possible mortgage foreclosure tributed to the subprime mortgage crisis by compelling in the fi ve boroughs. The Lawyers’ Foreclosure Interven- banks to make unsound loans in order to meet their CRA tion Network (LFIN) is a pro bono initiative in which obligations. Mr. Altamuro’s article addresses a different, attorneys work with homeowners to fi nd a solution but no less timely question: how can a law that defi nes that will allow them to remain in their homes. Among “community” in its most narrow geographic sense be ap- other matters, the sponsors of LFIN had to resolve issues plied in the Internet age? The article provides a succinct related to confl ict of interest, since many of the partici- synopsis of CRA and a concise and thoughtful analysis of pating attorneys work for New York City law fi rms that