Financial Services Litigation in 2024

As payment fraud schemes swell, the legal landscape is shifting, with plaintiffs seeking to lower legal standards and expand bank liability for third-party fraud.

Fremont, CA: As we sail into 2024, the financial services industry faces a sea of change. Litigation trends are evolving rapidly, influenced by technological advancements, regulatory shifts, and global economic currents. This article delves into the critical trends that legal professionals and financial institutions should monitor closely in the coming year.

Increased Regulatory Scrutiny

The winds of regulation are blowing more vigorously than ever. With an election year upon us, financial institutions are bracing for heightened activity from federal and state regulators. The Department of Justice (DOJ), Securities and Exchange Commission (SEC), and other enforcement authorities are expanding their horizons, focusing on the burgeoning cryptocurrency market. The industry must also navigate the complexities of new cyber rules and the implications of the Corporate Transparency Act.

Fair Lending Practices Under the Microscope

Fair lending remains a beacon of regulatory attention. The Consumer Financial Protection Bureau (CFPB), prudential controllers, and the DOJ are intensifying their focus on small business credit and redlining allegations. This year could mark a watershed moment as fair lending issues intersect with artificial intelligence, potentially leading to groundbreaking cases involving unfair treatment and deceptive practices.

The Rising Tide of Fraud

Technological sophistication brings with it a surge in fraudulent schemes. Financial institutions are facing an onslaught of fraud across all product lines, including the M&A domain. As payment fraud schemes swell, the legal landscape is shifting, with plaintiffs seeking to lower legal standards and expand bank liability for third-party fraud.

Arbitration: The New Battleground

Arbitration clauses have weathered the storm and are here to stay. Plaintiffs' counsel are increasingly wielding arbitration and mass arbitration as strategic tools. Financial services firms must prepare for a deluge of arbitration cases, which are being used to test new legal theories and exert pressure for favorable outcomes.

The horizon for financial services litigation in 2024 is dotted with challenges and opportunities. By staying vigilant and adapting to these emerging trends, the industry can navigate the legal complexities of the modern financial seascape. As we continue to observe these developments unfold, one thing is sure: the need for agile and informed legal strategies has never been greater.