Fintech lending is a rapidly evolving segment of debt markets around the world, presenting opportunities to banks, institutional investors, venture capitalists, and technology platforms. The segment’s evolution is echoed in the varying terms describing fintech lending, including peer-to-peer lending, online lending, digital lending, algorithmic credit, and direct lending. With fast-paced innovation and an ideal regulatory climate, perhaps the segment may simply be called “lending” in the future.
As technologies and regulatory guidelines shape the burgeoning segment, lawyers in our fintech lending group can assist sector participants in achieving their business and investment objectives while managing risks. Whatever market niches, strategies, and algorithms our clients wish to develop, we work side by side with them to innovate and navigate the legal, regulatory, and commercial challenges of this evolving consumer debt market segment. We assist sector participants with strategies, including:
- Combining digital technology with crowdfunding techniques to offer consumers unsecured credit
- Partnering with banks and platforms to provide credit in entirely new ways
- Servicing consumer and commercial loans on behalf of institutional investors
- Exploring new frontiers of providing secured credit on internet sites or web apps
- Investing in fintech loans as a new credit asset class
- Providing credit and custody services to cryptocurrency investors in compliance with the Investment Advisers Act and the Commodity Exchange Act
We leverage our deep experience in consumer financial services regulation, e-commerce regulation, private equity, private fund formation, cybersecurity, finance, and intellectual property to provide holistic support to market participants and the legal underpinning to innovation in the delivery of financial services in fintech lending.
Areas of Practice
Fintech Banking, Payments, and Bank Regulation
We have one of the preeminent fintech banking and payments financial services regulatory practices in the United States and are active in Europe and Australia. We represent non-bank lenders, consumer finance companies, loan servicers, payday lenders, money-services businesses, online financial service aggregators, and technology companies in regulatory compliance and enforcement actions.
In the United States, we have extensive experience with the statutes and regulations enforced by the Consumer Financial Protection Bureau, including Regulation B, E, and Z and Gramm-Leach-Bliley. We have further experience with requirements imposed by the Financial Crimes Enforcement Network and the Federal Trade Commission related to the Bank Secrecy Act, suspicious activity reporting, consumer privacy protection, and data security policies.
Our practice includes traditional and e-commerce applications of current law governing consumer financial services. We have a dedicated group of professionals that for more than 20 years has helped companies obtain and maintain state licenses nationwide, including navigating the on-line Nationwide Multistate Licensing System, and federal agency and GSE approvals, to engage in all manner of residential mortgage finance activities. In recent years, the state licensing work has expanded to cover the consumer, commercial mortgage, and non-real estate-secured commercial finance activities of the fintech lending sector of the economy. We are also very familiar with applicable state laws and federal preemption affecting usury, assignee defenses, and other issues.
Investment Funds and Investment Adviser Regulation
We advise investment advisers and investors on all aspects of fund formation and maintenance, including fund documentation, structuring, and sponsor equity. We have a well-regarded team in the United States that represents institutional investors and high-net-worth individuals on a cross-section of fund investments.
In the areas of global regulatory compliance, we guide investment advisers and alternative investment fund managers on the U.S. Investment Advisers Act of 1940 and Investment Company Act of 1940, the Alternative Investment Fund Manager Directive and implementing legislation in EU member states including the UK and Germany, and the Australian Corporations Act 2001, which includes financial services licensing required for financial advisors.
We have extensive experience in traditional registered offerings, private placements, and other exempt offerings around the globe, including under the U.S. Securities Act of 1933 and Securities Exchange Act of 1934, the Markets in Financial Instruments Directive and the Prospectus and Transparency Directives (and implementing legislation in several EU member states), and Australian securities laws administered by Australian Securities and Investments Commission. We also have significant experience in crowdfunding and other innovative capital raising techniques provided by new laws such as the JOBS Act, Regulation A/A+, and other new exemptions from registration under securities laws. We have extensive experience considering the application of securities laws in the United States and other jurisdictions in coin offerings and distributions of digital tokens and cryptocurrency.
With a global team in place, our capital markets and securities transactional capabilities span numerous jurisdictions. We regularly represent issuers, investment banks, placement agents, investors, and investment groups in a wide range of transactional, compliance, and regulatory securities matters. In addition to serving as company counsel, we provide experienced representation as underwriters’ counsel in public offerings and other transactions.
Private Equity, Venture Capital, and Emerging Growth Companies in the Fintech Space
We advise private equity and venture funds, corporate investors, and individuals in connection with their investments in startup, early-stage, and emerging-growth fintech companies. With lawyers on the ground across the world’s leading technology hubs, including Silicon Valley, Austin, Seattle, Pittsburgh, London, Berlin, Paris, Singapore, and Tokyo, we have deep experience in high-growth and technology-driven ventures.
Whole Loan Sales, Servicing Transfers, and Warehouse Finance
We advise on whole loan sales, sales of servicing rights, joint venture agreements, and warehouse financing, using traditional credit agreements and repurchase agreements. We are well-versed in the transactional and regulatory implications of table funding marketplace loans.
Our securitization lawyers understand the nuances of fintech lending and participated in comment letters in response to the U.S. Treasury Department’s 2015 Request for Information on the marketplace lending sector. We have advised on a wide variety of transactions involving term and revolving assets, including structured warehouse facilities, asset-backed commercial paper conduits and medium-term note programs, term securitizations, and revolving structures. We have significant experience in consumer financial assets such as mortgage loans, home equity loans, automobile loans and leases, credit cards, receivables, and student loans. We have worked with securitization sponsors and others on compliance with credit risk retention and other regulatory challenges under the Dodd-Frank Act.
From proprietary risk models and order management systems to technology platform and lender partnerships, we are well positioned to help fintech lending participants establish, enforce, and leverage their intellectual property rights. On the transactional side, we can advise on the intellectual property and related branding aspects of partnerships between financial institutions and lending platforms.
We understand how evolving laws relating to technology and information apply to e-commerce, and how our clients—whether they are licensors, licensees, or buyers or sellers—protect their opportunities and respond to the transformative nature of conducting all or part of their business electronically.
We recognize that emerging commerce regulations overlay traditional laws and industry practices. As this modern commerce evolves, it’s important to engage lawyers who grasp all facets of this sector.
We help fintech lending participants navigate the legal, regulatory, policy, and business issues surrounding platforms, services, and technologies, including cloud platforms, mobile, bill payment, cards and codes, and technologies (e.g., radio-frequency identification, near-field communication, and peer-to-peer voice over internet protocol). We also understand payment systems typically involve e-contracting and consumer protection disclosures that require compliance with special rules for electronic dealings. We have experience in investigating and conducting due diligence on merchants, agents, and business partners seeking access to the financial system to ensure compliance with anti-money-laundering, counter-terrorist-financing, and other criminal laws around the world.