5 notable GCs in the news

General counsel sound off on government information gathering, the future of banking regulation, and more

Microsoft problem

 

“The idea that the government may be hacking into corporate data centers was a bit like an earthquake, sending shock waves across the tech sector. We concluded that we better assume that there might be such an attempt at Microsoft, or has already been.”

 - Brad Smith, general counsel, Microsoft

 

We know about the aftermath of the NSA leaks when it comes to tech companies — many are now banding together to appeal to world governments to adopt more transparency when it comes to surveillance tactics. But let’s take a trip back to the beginning. How did the technology companies view the revelations when they first came to light? Remember, these leaks came out of nowhere, and many companies did not know the full extent of the government’s spying.

Microsoft was one of those companies. And in an interview with the New York Times, Microsoft GC Brad Smith said that the revelations shook up the entire tech community. The threat of government surveillance forced Microsoft to instantly increase the company’s cybersecurity measures. Smith said that the company simply wanted to play by the rules of the law: “We all want to live in a world that is safe and secure, but we also want to live in a country that is governed by the Constitution.”

Bad Bank

 

“There is a need for a cultural shift. You need to focus on making examples of people, and nothing focuses the attention like a hanging. How are people promoted, how did those people get into those senior seats? This is another powerful way to send a message.”

 - Thomas Baxter, general counsel, Federal Reserve Bank of New York

 

Banking has changed, and not in a good way said Thomas Baxter, general counsel for the Federal Reserve Bank of New York, at a November conference. Many legal experts in the banking field feel that financiers have begun to focus on transactions rather than customers, and that disconnect has led to a drop in service. But, Baxter says, punishments for those who sidestep regulations can help the banking industry get back on the right track.

At the same conference, JPMorgan Chase GC Stephen Cutler told attendees that he expects a “regulatory spiral” to occur as increased rules are put into place to regulate banks. He also said that “what has become enforcement-worthy has also changed” as regulators place increased punishment for disputes that previously would have been covered by supervision. Bank of America GC Gary Lynch, meanwhile, remarked that the government’s “regulatory fervor” and increased enforcement actions were likely to continue for at least the next couple of years.

Wrigley Field

 

“We agree with the mayor and we’re anxious to move forward. We appreciate the tremendous amount of energy from the city, Ald. Tunney and the community that it has taken to get us to this point. We want to get started and we’re looking forward to resolving the issues that remain so we can do so quickly.”

 - Mike Lufrano, vice president and general counsel, Chicago Cubs

 

When acting as the GC of a major professional sports team, money is typically not an issue. According to Forbes, the team value of the Chicago Cubs sat at exactly $1 billion as of March 2013. However, all the money in the world can’t resolve some issues, such as space limitations and having to navigate tricky city ordinances. That’s why Chicago Cubs GC Mike Lufrano dealt with when trying to negotiate terms with the city that would allow the Cubs franchise to renovate portions of the century-old Wrigley Field.

Eventually, the Cubs and the city of Chicago came to an agreement, taking over a year and multiple rounds of negotiations to get there. Through the terms of the agreement, the city agreed to vacate up to 25 feet of street and sidewalk for expansions, allow the team to schedule more nighttime baseball games, and add a “branding arch.” The Cubs, in turn, are now being pressured to renovate the park to accommodate more visitors to the city’s Wrigleyville neighborhood.

Heap of Money

 

“At what point does this stop? We should all be concerned, because at a certain point people become immune to the numbers.”

 - Stephen Cutler, general counsel, JPMorgan Chase

 

For those who don’t remember, JPMorgan Chase got in a teeny, tiny bit of trouble with the Department of Justice over some itty-bitty financial misgivings during the 2008 mortgage crisis — the DOJ proceeded to settle with the bank for $13 billion as a result of its indiscretions. U.S. Attorney General Eric Holder praised the settlement at the time, saying, “J.P. Morgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm's behavior.”

However, despite JPMorgan’s CEO Jamie Dimon saying that the bank is “pleased to have concluded this extensive agreement,” some high-ranking company officials still aren’t too happy with the deal. Cutler spoke out against regulators’ actions to The Wall Street Journal, saying that officials should conduct an investigation into what he viewed as duplicitous regulator behavior. Cutler said, “There has to be a better way to allocate government resources.”

OMG SELFIE

 

“Any assertion that CTIA and its member companies have done anything other than move as quickly as possible ... to remove the aftermarket for stolen phones is false.”

 - Michael Altschul, senior vice president and general counsel, CTIA

 

Are cell phone companies blocking anti-theft technology due to a preexisting relationship with insurance companies? New York Attorney General Eric Schneiderman believes it’s a possibility, and he sent letters on Dec. 10 to top executives of AT&T, Verizon Wireless, T-Mobile, Sprint and US Cellular asking why they prevented Samsung from implementing a “kill switch” in carrier-approved smartphones. Schneiderman said, “If carriers are colluding to prevent theft-deterrent features from being pre-installed on devices as means to sell more insurance products, they are doing so at the expense of public safety and putting their customers in danger.”

However, the CTIA, the industry group that represents wireless cell phone carriers, vehemently denied Schneiderman’s claims. In a statement, Altschul said the companies simply recognized that a kill switch was not a solution to smartphone crime because even the switch would be vulnerable to hackers. He added in a statement, “Our members are continuing to explore and offer new technologies to address these crimes while not inadvertently creating a ‘trap door’ that hackers and cybercriminals could exploit.”

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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