Firm News
Second Circuit Rules BLIPS Claims Against NatWest Are Time-Barred
November 19, 2014
The U.S. Court of Appeals for the Second Circuit on Nov. 19 ruled in favor of SRZ client The Royal Bank of Scotland Group, as successor to National Westminster Bank PLC (“NatWest”), in a suit brought by a group of investors alleging fraud in connection with loans issued by NatWest to facilitate the investors’ purportedly fraudulent tax shelter schemes. Those loans — worth several hundred million dollars — were part of a complex series of transactions known as a Bond Linked Issue Premium Structure (“BLIPS”) that investors used to generate substantial, on-paper tax losses. The IRS subsequently disallowed the investors’ tax losses, and the investors brought suit years later. NatWest successfully moved to dismiss the investors’ claims as time-barred under the New York statute of limitations. The Second Circuit unanimously affirmed, finding that the investors’ claim to have first discovered NatWest’s awareness of the allegedly fraudulent nature of the BLIPS scheme in 2009, after a government witness testified in a criminal case involving BLIPS, was “entirely artificial.” The Second Circuit agreed with NatWest that the publicly available information concerning BLIPS beginning in 2000 — including, among other things, IRS notices, a report by a U.S. Senate Subcommittee, news articles, and other civil and criminal litigation — rendered the investors’ claims untimely under the statute of limitations.
The SRZ team representing The Royal Bank of Scotland and NatWest was led by litigation partner Howard Schiffman and included litigation partner Michael E. Swartz and associate Robert E. Griffin.
Related Insights
Alerts
On Feb. 16, 2024, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury (“Treasury”), issued a notice of proposed rulemaking (“Proposed Rule”)[1] continuing the process of implementing regulations to combat illicit finance risks posed by abuse by some in the real estate market. The Proposed Rule would require certain persons involved in residential real estate closings and settlements to submit reports (“Real Estate Reports”) and keep accurate records of certain non-financed transfers of US residential real property. The reasoning behind the Proposed Rule is explained extensively in FinCEN’s December 2021 Anti-Money Laundering Regulations for Real Estate Transactions Advanced Notice of Proposed Rulemaking, which discusses “the opacity of shell companies or other legal entity structures to mask true beneficial ownership of a property and their involvement in real estate transactions.”[2]
Alerts
The Federal Trade Commission (“FTC”) passed its long-anticipated final Non-Compete Rule broadly prohibiting the use of worker non-competition restrictions. The Non-Compete Rule is scheduled to be published in the Federal Register on May 7, 2024, and become effective 120 days later, on Sept. 4, 2024. To the extent the Non-Compete Rule is more restrictive than a state or local law, the Non-Compete Rule will supersede such other law. However, the validity of the Non-Compete Rule is already being challenged in three separate court cases and its effective date may be delayed.
Alerts
On Feb. 16, 2024, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the United States Department of the Treasury (“Treasury”), issued a notice of proposed rulemaking (“Proposed Rule”)[1] continuing the process of implementing regulations to combat illicit finance risks posed by abuse by some in the real estate market. The Proposed Rule would require certain persons involved in residential real estate closings and settlements to submit reports (“Real Estate Reports”) and keep accurate records of certain non-financed transfers of US residential real property. The reasoning behind the Proposed Rule is explained extensively in FinCEN’s December 2021 Anti-Money Laundering Regulations for Real Estate Transactions Advanced Notice of Proposed Rulemaking, which discusses “the opacity of shell companies or other legal entity structures to mask true beneficial ownership of a property and their involvement in real estate transactions.”[2]
Alerts
The Federal Trade Commission (“FTC”) passed its long-anticipated final Non-Compete Rule broadly prohibiting the use of worker non-competition restrictions. The Non-Compete Rule is scheduled to be published in the Federal Register on May 7, 2024, and become effective 120 days later, on Sept. 4, 2024. To the extent the Non-Compete Rule is more restrictive than a state or local law, the Non-Compete Rule will supersede such other law. However, the validity of the Non-Compete Rule is already being challenged in three separate court cases and its effective date may be delayed.