Libor Scandal Provokes Return to Prime Rate

Libor Scandal Provokes Return to Prime Rate

Author: Eric Everson, MBA, MSIT-SE (Juris Doctorate Candidate, May 2013)

The global banking industry has been rocked by the latest LIBOR scandal.  News of this scandal broke when Barclays Bank was fined with a $454 Million civil settlement reached with various international enforcement agencies.  Estimates currently suggest that the LIBOR scandal could cost banks upwards of $22 Billion (Source: http://www.cnbc.com/id/48169576).  These developments have the international financial industry reconsidering a return to the United States Prime Rate.

The global banking industry has steadily migrated away from the Prime Rate as US interest rates continue to be at year-over-year record lows.  The LIBOR (London InterBank Offer Rate) emerged as a global standard, yet its uncertainty has the global banking industry considering a return to the assurance of the US Prime Rate.

Why is Prime Rate better?  Rather than a composite index comprised by reporting banks, the US Prime Rate is calculated very simply.  Simply stated the Prime Rate is determined by adding 300 basis points or 3.00 percentage points to the Federal funds target rate. As a result if the Federal funds target rate is 0.25%, then the U.S. Prime Rate will be 3.25%.  In comparison the LIBOR is the rate that banks lend to each other and as the latest scandal has unveiled, its certainty is anything by assuring.

In recent years, Prime Rate has been steadily replaced by the LIBOR by global banks operating as MNE’s (Multinational Enterprises).  As a result the banks have enjoyed more flexibility towards profitability, yet it has come at the cost of high risk.  This risk is confirmed by reports of losses surging into the billions.  These losses have many bankers and shareholders alike seeking the reassurance of the US Prime Rate.

#CNBC

@IntleDiscovery

---------------------------------------------------------------------------------

About the Author:  Eric Everson is a 3L law student at Florida A&M University – College of Law.  Prior to law school he earned an MBA and Masters in Software Engineering while he tenured ten years of executive leadership in the U.S. telecommunications industry.  The views and opinions presented in this blog are his own and are not to be construed as legal advice.  Eric Everson currently serves on the Board of Governors for The Florida Bar Young Lawyers Division Law Student Division and is the President of the Electronic Discovery Law Student Association at Florida A&M University – College of Law.  Follow @IntleDiscovery        

Mobile Phones and International eDiscovery: Let’s Get mESI

Mobile Phones and International eDiscovery: Let’s Get mESI

Author: Eric Everson, MBA, MSIT-SE (Juris Doctorate Candidate, May 2013)

As a software engineer turned law student, I spent countless hours in my former life embedded in the Software Development Lifecycle (SDLC) creating mobile software.  My specialization as a mobile software developer was in mobile security software, hence my company MyMobiSafe.com.  Interestingly as C-level executives increasingly conduct their global business via mobile devices (cell phones, tablets, etc), this is opening new doors of consideration with regard to International Electronic Discovery. 

Part of what makes international business law so interesting is the classic notion that “the deal” follows the law of the nation where the agreement was reached.  Of course this also highlights the importance of forum selection clauses in any international business contract, but we will save that for another day.  Much more interesting today are the global transactions being handled via mobile devices and the implications this may have on International Electronic Discovery.  Let’s focus on two key areas for now: Preservation and Extraction. 

Preservation: Under Zubulake, every American company (or multinational company with an American conglomerate) has a legal duty to preserve electronically stored information (ESI).  This gets more complex as the bulk of preservation today is solely focused on the preservation of computer-generated ESI rather than the ESI produced by mobile devices.  High profile international legal issues such as the recent Barclays fiasco demonstrate that ESI is generated all over the world and often from the palm of a C-level executive’s iPhone.  Now is a great time for businesses to begin shifting their preservation efforts to mobile forms of ESI.  One tool to better capture and preserve this data is via the cloud and via the various cloud-based backup technologies (i.e. iCloud for your iPhone).       

Extraction: Once the data is preserved the next question becomes how we extract it in such a way that it doesn’t compromise its native format.  There are a growing number of tools available for extraction of mobile ESI (mESI).  It is important to seek a software that complements your current operating environment without costing you too much.  As noted there are a growing number of tools available, but one that stands out today is the Nuix Investigator suite.  This solution particularly allows you to search and analyze data across multiple devices with unmatched speed. 

By virtue of the internet, any business can become an international business overnight.  The nature of business today is global and businesses as well as attorney’s must stay connected with the technologies that move business forward.  From a technology perspective we are shifting from a computer-based environment to one that integrates multiple devices from handsets to tablets.  mESI is a new frontier in eDiscovery, yet it is one that plays a vital role in nearly every business transaction today.  Whether you are a small business or working on behalf of an MNE, take the strides today to reassess the current eDiscovery strategy to incorporate the preservation of mESI.

#eDiscovery

@IntleDiscovery

---------------------------------------------------------------------------------

About the Author:  Eric Everson is a 3L law student at Florida A&M University – College of Law.  Prior to law school he earned an MBA and Masters in Software Engineering while he tenured ten years of executive leadership in the U.S. telecommunications industry.  The views and opinions presented in this blog are his own and are not to be construed as legal advice.  Eric Everson currently serves on the Board of Governors for The Florida Bar Young Lawyers Division Law Student Division and is the President of the Electronic Discovery Law Student Association at Florida A&M University – College of Law.  Follow @IntleDiscovery        

International eDiscovery: Barclays Gearing up to be Battle Royale

International eDiscovery: Barclays Gearing up to be Battle Royale

Author: Eric Everson, MBA, MSIT-SE (Juris Doctorate Candidate, May 2013)

In a new twist to what is likely to become the major international eDiscovery case of the century, Barclays CEO, Bob Diamond announced Tuesday that he will be resigning from his post.  The embattled CEO is at the center of the Libor trading scandal that has rocked the international financial markets.

Barclay’s previously agreed to pay the Commodity Futures Trading Commission (CFTC), the U.S. Department of Justice (DOJ) and the U.K.'s Financial Service Authority (FSA) a total of $454 Million.  In an interesting international eDiscovery development, investigators uncovered a myriad of smoking gun emails during this investigation which revealed a conspiracy stretching from the banks trading desks to top senior management.  These emails reportedly demonstrate barking orders from the trading desks and willful compliance by the managers involved.  This scheme accused Barclay’s of attempting to manipulate the bank's true funding costs, which are key in setting short-term interest rates used in approximately $350 trillion of financial market contracts.

In a new development this week Bob Diamond will face-off with British lawmakers on Wednesday, likely dragging the Bank of England, government, and other international banks deeper into the scandal.  International electronic discovery is the pursuit of digitally native filetypes for use in matters of litigation that transcends international borders.  Barclay’s operates as a Multinational Enterprise (MNE) and is subject to a global standard of Electronically Stored Information (ESI) preservation.  Multination Enterprises (MNE) are a special kind of corporation that combines multiple entities of incorporation located throughout the global marketplace and most often include at least one American corporation in the business unit hierarchy.  MNE’s are especially subject to a diverse global framework of laws, but are equally subject to a litany of international eDiscovery practices. 

#eDiscovery

@IntleDiscovery

---------------------------------------------------------------------------------

About the Author:  Eric Everson is a 3L law student at Florida A&M University – College of Law.  Prior to law school he earned an MBA and Masters in Software Engineering while he tenured ten years of executive leadership in the U.S. telecommunications industry.  The views and opinions presented in this blog are his own and are not to be construed as legal advice.  Eric Everson currently serves on the Board of Governors for The Florida Bar Young Lawyers Division Law Student Division and is the President of the Electronic Discovery Law Student Association at Florida A&M University – College of Law.  Follow @IntleDiscovery