Obtaining Financial Records for Litigation

1. Obtaining Financial Records for Litigation Tony Salazar Davis Agnor Rapaport & Skalny, LLC

2. About Financial Institutions • There are different types of financial institutions (e.g., banks, thrifts, credit unions). • Financial institutions have different chartering authorities and regulators (State v. National, OTS v. OCC v. FRB). • Common denominator among financial institutions is deposit insuring organization (FDIC or NCUA). • Bank’s can use trade names. (e.g. Redneck Bank is Bank of the Wichitas, Capital One trading as Chevy Chase Bank).

3. Finding a Financial Institution • Need tofind a Bank or a savings and loan? Visit the FDIC’s “Bank Find” website located at: http://www2.fdic.gov/IDASP/ • Need to find a credit union? Visit the NCUA’s “Find a Credit Union” website located at: http://www.ncua.gov/dataservices/findcu.aspx • Need local Bank/savings and loan information? Contact Maryland Bankers Association http://www.mdbankers.com/ or 410-269-5977 • Need local credit union information? Contact Maryland & DC Credit Union Association http://www.mdcul.org/ or (800) 492-4206

4. Dynamics of FI Document Response • Volume of requests received is large(100’s per month); staff allocated to responding small. • Non-revenue work. • Subpoena response generally has minimal legal oversight or involvement. • In-house legal resources limited. • Regulators review activity for compliance with privacy laws, not rules of civil procedure. • Bank’s may not process their own information. • Locating information can be time-consuming involving different offices, employees, services and IT systems. • Obtaining information can be costly (servicer fees, fees from prior FI after merger). • Filing motion for protective order doesn’t mean that FI won’t produce documents. • Claims of rude and bullying behavior by attorneys. • Service on branch or other office gives appearance of lack of knowledge and increases likelihood of late/incomplete response. • Service upon the proper office increases likelihood of timely and proper response. • Survey of FI says nearly 50% of subpoenas fail to include certification.

5. Federal Statutes of Interest GRAMM-LEACH-BLILEY ACT15 U.S.C. Sec. 6801-6809Disclosure of Nonpublic Personal Information • Financial institutions have an affirmative and continuing obligation to protect the security and confidentiality of their customers' nonpublic personal information. • Does not protect commercial customers. • Protections provided for consumers obtaining financial products or services which are to be used primarily for personal, family, or household purposes. Disclosure may only be made in accordance with institution policy and customer notice. • Exceptions include disclosures made under consumer consent (e.g. terms of account agreement) and to comply with a properly authorized civil, criminal, or regulatory investigation or subpoena or summons by Federal, State, or local authorities. • Nonpublic personal information means personally identifiable financial information- (i) provided by a consumer to a financial institution; (ii) resulting from any transaction with the consumer or any service performed for the consumer; or (iii) otherwise obtained by the financial institution. • Nonpublic personal information includes any list, description, or other grouping of consumers (and publicly available information pertaining to them) that is derived using any nonpublic personal information other than publicly available information.

6. Federal Statutes of Interest (cont.) RIGHT TO FINANCIAL PRIVACY ACT OF 1978 12 U.S.C. Sec. 3401-3422 • Disclosure of Financial Information to the U.S. Government. • Specifies the circumstances in which financial institutions can disclose personal financial records to federal government agencies. • Numerous exceptions. • Primary consumer protection is the general requirement that Federal government agencies provide individuals with a notice and an opportunity to object before a financial institution can disclose personal financial information to a federal government agency.

7. Subpoena Rules –MD Rule 2-510 MD Rule 2-412(c) 510(a) General A Subpoena is required to compel a non-party . . . to attend . . . and produce and permit inspection, copying , testing, or sampling of designated documents 2-412 Deposition Subpoena • Must contain a designation of material to be produced • Served at least thirty (30) days before the date of the deposition • Include notice of duty to designate one or more persons to testify 2-510(d) Service • To the Corporation • To an agent authorized by appointment or law to receive service • To institution Counsel • Unless impracticable, a party shall make a good faith effort to cause a trial or hearing subpoena to be served at least five (5) days before the trial or hearing. 2-510(e) & (f) Objections • Court Proceedings –Motion may be “filed promptly and . . . at or before the time specified in the subpoena for compliance” • Deposition - Person served can seek protective order under Rule 2-403 or file an objection to production within ten (10) days of service. If an objection is filed, the party serving the subpoena is NOT entitled to the production except pursuant to an order of the court issuing the subpoena. 2-510(h) Protection of Persons subject to Subpoenas An attorney responsible for subpoena issuance “shall take reasonable steps to avoid imposing undue burden or costs on a person subject to the subpoena.” 2-510(i) Records Produced by Custodians • Delivery to clerk “at or before the time specified for production” • Records are sealed with custodian certification included • When custodian’s presence is required “the subpoena shall state with specificity the reason for the presence of the custodian”

8. Maryland Confidential Records Act Annotated Code of Maryland, Financial Institutions Article Sections 1-301 – 1-306. Who is covered 1-301(b)(1) Fiduciary Institutions: • Banks (State & federally chartered); • Credit Unions (MD or federally chartered); • Other organizations (trust companies) formed under MD banking laws and supervised by Commissioner of financial regulation; • Savings and Loan associations (whether MD or federally chartered) What is covered 1-301(c)(1) Financial Records – defined as “the original or any copy or record of”: (i) A document that grants signature authority over a deposit or share account;  (ii) A statement, ledger card, or other record of a deposit or share account that shows transactions in or with respect to that deposit or account;  (iii) A check, clear draft, or money order that is drawn on a fiduciary institution or issued and payable by or through a fiduciary institution;  (iv) Any item, other than an institutional or periodic charge, that is made under an agreement between a fiduciary institution and another person and that constitutes a debit or a credit to that person's deposit or share account; or  (v) Any information that relates to a loan account or an application for a loan.  (2) "Financial record" includes any evidence of a transaction conducted by means of an electronic terminal. 

9. Maryland Confidential Records Act (cont.) Cases to Review • Suburban Trust Co. v. Waller, 44 Md. App. 335, A.2d 758 (1979). Case predates Confidential Records Act but stands for the general proposition that a bank customer’s account information is confidential and, absent compulsion by law, a bank may not make any disclosures concerning a customer without the customer’s prior authorization. • Taylor v. NationsBank, 365 MD. 166, 776 A.2d 645 (2001). Disclosure of unlisted phone number permitted because statute prohibits “the disclosure of certain records, rather than information about those records”. But, disclosure was found to be a breach of contract and implied obligation of confidentiality. • Bond v. Slavin, 157 Md.App. 340, 851 A.2d 598 Md.App. (2004). The subpoena at issue was served on Bank of America and commanded a custodian of records to “[p]ersonally appear and produce documents or objects: at Circuit Court for Baltimore City, Courthouse East, Family Division, Room 3, 1st Floor, 111 North Calvert Street, Balt., MD 21202 on Tuesday the 18th day of February, 2003 at 9:30 a.m.” Instead, the Bank delivered the joint bank records of Mr. and Mrs. Bond to counsel for Mr. Slavin at a time prior to and place other than that specified in the subpoena. The Bank had no right to do so. When a court issues a subpoena duces tecum requiring a custodian of financial records to “personally appear and produce [financial records]” at a certain place on a certain date and time, the custodian cannot-without obtaining the permission of the person(s) whose financial records have been subpoenaed-produce those records at a different place on a different date. Such a subpoena “does not ... signify a delivery of the papers into the hands of the party calling for their production or of his counsel, or a submission of them to his examination. • Carter v. State, 178 Md.App 400, 941 A.2d 1222 (2008). A Bank’s disclosure to police that the defendant made cash deposits smelling of drugs and furnishing defendant’s address did not disclose financial records.

10. Maryland Confidential Records Act (cont.) The Subpoena 1-304 (a) The subpoena (warrant, summons or court order) must appear “ON ITS FACE” to have been issued on lawful authority. Bank Response 1-304 (b) is operative section providing: “(b) A fiduciary institution may disclose or produce financial records or information derived from financial records in compliance with a subpoena served on the financial institution if: (1) The subpoena contains a certification that a copy of the subpoena has been served on the person whose records are sought by the party seeking the disclosure or production of the records; or (2) Contains a certification that service has been waived by the court for good cause.”

11. Maryland Confidential Records Act (cont.) Caution - Criminal Penalties 1-305(b) “Any person who knowingly and willfully induces or attempts to induce an officer, employee, agent or director of a fiduciary institution to disclose financial records in violation of this subtitle is guilty of a misdemeanor and on conviction is subject to a fine of not more than $1,000.”

12. Other Relevant State Statute Financial Institutions Article Section 1-205 (Limitation on access to certain documents) Section 1-205(c) provides that “(1) Compliance review documents are confidential and are not discoverable or admissible in evidence in any civil action arising out of matters evaluated by the compliance review committee” Compliance review documents are documents prepared for or created by a compliance review committee. A compliance review committee means an audit, loan review or compliance committee appointed by the board of directors of a depository institution. But see, 1-205(e) “This section may not be construed to limit the discovery or admissibility in any civil action of any documents that are not compliance review documents.”

13. Summary for Success • Identify and serve the correct institution. • Serve the subpoena well in advance of production date. • Contact the financial institution if a prompt response is necessary. • Serve the subpoena on the proper office. • Include Certification of Service identifying all account-holders. • Don’t assume objection/motion to quash filing will stop disclosure. • Understand scope of the request. • “You can catch more flies with honey than with vinegar.”