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News Room
01/26/2010
Steven McCartan Examines the Scope of Assignee Liability Under the FTC Holder Rule for Financial Fraud Law
Lathrop & Gage attorney Steven McCartan (Business Litigation - Kansas City) has published "Am I My Brother’s Keeper? The Scope of Assignee Liability Under the FTC Holder Rule." The article appears in the current edition of Financial Fraud Law, published by A.S. Pratt & Sons.
"Under the common-law 'holder in due course' rule, a lender without knowledge of misrepresentations or omissions could not be liable for them," Mr. McCartan writes. "But in 1975 the Federal Trade Commission changed the common law to make lenders liable for certain acts and omissions. This change, known as the “FTC Holder Rule,” subjected lenders to liability even in instances where they were unaware of the underlying fraud. In 1980, Congress amended the Truth in Lending Act to narrow the scope of lender liability to instances in which the fraud was 'apparent on the face' of the financing documents signed to the lender."
The article goes on to explore the evolution of these legal changes and the kinds of acts or omissions that are “apparent on the face” of financing documents so as to give rise to lender liability. Based upon this analysis, Mr. McCartan concludes with some recommendations to lenders on minimizing the scope of liability under the FTC Holder Rule.
A graduate of the University of Missouri School of Law, Mr. McCartan regularly represents clients in litigated and non-litigated business-to-business disputes such as breach of contract matters, loan enforcement actions, construction matters, insurance disputes, regulatory matters, business torts and professional liability matters. Financial Fraud Law offers in-depth legal analysis of fraud issues by some of the country’s best practitioners.
About Lathrop & Gage:
A full-service law firm, Lathrop & Gage LLP has 300 attorneys in 11 offices across the country, from Los Angeles to New York. In 2009, Chambers USA ranked Lathrop & Gage’s corporate, environmental, intellectual property, litigation, real estate and labor and employment teams among the best in their respective regions. For more information, visit www.lathropgage.com or www.beentherewonthat.com.
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