Suing Your Regulators: A Practical Path

September 13, 2018 - Much ink has been spilled in this space on the LSTA’s risk retention lawsuit against the SEC and Federal Reserve Board.  But what went into the decision to prepare for litigation and ultimately sue our industry’s primary regulators?  And, once those decisions were made, how were they executed and what were some of the main considerations?  These questions and others are addressed in an article, Suing your Regulators: A Case Study from a General Counsel’s Perspective, written by LSTA general counsel Elliot Ganz and recently published in the International In-House Counsel Journal.  Stating the obvious, Mr. Ganz notes that litigating against one’s primary regulators is not a tactic to be taken lightly or used frequently but sometimes it is the best, or only, option. For a general counsel, the decision to litigate, and the implementation and conduct of the litigation, is fraught with risks and challenges. The article examines some of the difficult issues faced by the LSTA from the perspective of its general counsel.  The first challenge was confirming with independent experts that the case was as good as you thought it was (and that you were not suffering from “confirmation bias”).  Other issues included engaging with the board on whether suing is the best option, hiring the right counsel, picking the right jurisdiction, staying the course after a number of setbacks, and, very importantly, litigating in as cooperative a way as possible in order to maintain good long-term relations with the regulators.

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