Financial litigation law governs the court process of resolving disputes relating to financial and money transactions. These disputes involve banks, credit card companies, brokerage firms, private equity funds, and insurance companies. Financial litigation is a combination of civil, criminal and administrative law that arises from financial transactions. Financial litigation is composed of both federal and state laws, administrative regulations and court decisions.
The federal government enacted several laws for banks and financial institutions to comply with certain standards as banking and finance are two of the highly regulated industries in the country due to the nature of the products and services they provide. Banking and finance transactions deal with sensitive matters, and, as such they are protected by law, like the Bank Secrecy Act and Truth in Lending Act. Other federal financial legislation include Dodd-Frank Act, Consumer Protection Act, and Fair Debt Collection Practices Act. In addition to the federal government, there are other agencies who have oversight on specific financial transaction, such as the Securities and Exchange Commission towards the registration of public companies and disclosure of stock trading. Financial litigation law touches on a broad spectrum of issues such as securities law, corporate law, consumer law, and bankruptcy law.
Among the most common financial litigations are actions challenging a company's transaction, which transaction may have caused a change in the trading price of stocks, insider trading, and securities trading fraud. Aside from the company, officers and directors are routinely named defendants in derivative actions. Financial litigators represent either the client or the company these cases. Clients often choose to sue companies through a class action as the anticipated pay-out in class actions are higher compared to individual suits. In addition, the costs of pursuing a class action is also shared among the class members, while the costs of pursuing an individual action is shouldered only by the plaintiff. Moreover, there is strength in numbers that's why victims of securities fraud or insider trading choose to sue as a class.
Financial litigation is a complex dispute that will touch on intertwining laws. It will not just touch on the complicated web of federal and state laws and regulations, but also often encroach on international laws regarding financial transactions. Financial transactions are also sophisticated transactions, which means these transactions involve legalese that takes experts to un-weave. Because the monetary value of financial disputes are often high, parties tend to litigate in order to either recover the money lost or refuse to pay the money lost. In addition, violations of banking and finance rules and regulations are met with steep punishment. These types of litigation are also often highly publicized, so being charged with any violation of banking or finance law could severely affect the reputation and future business prospects of companies, and their officers and directors. In addition, settlements arising from financial litigation have the possibility of draining a company's resources.
It is for these reasons that companies have a retinue of financial litigators to defend them in cases of banking and finance law violations. Financial litigators are not just skilled in defending companies, they are also knowledgeable in matters of regulation, enforcement, and transactions.