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5 Trends to Watch: 2023 Financial Services Litigation

  1. Greater Risk of Fraud – As liquidity dries up and costs rise, people and businesses may resort to Ponzi and other fraudulent schemes to survive. Payment fraud will also continue to create litigation risk. Meanwhile, the Department of Justice (DOJ) and government regulators have sharpened their focus on the financial markets. These factors may combine to increase lawsuits against financial services providers, alleging that they benefitted from and failed to prevent customer and/or third-party misconduct. Trustee and receiver lawsuits can also be expected to rise as businesses fail. New theories are being advanced for recovery. 

  2. Beware of Unintended Consequences – New technologies and business combinations continue to decrease costs and enhance the customer experience. But as bank branches close, employees work from home, and financial services are routed online, some communities may face new access barriers. The unintended potential disparate impact of innovative technologies like artificial intelligence and universal mobile banking may lead to even more regulatory scrutiny and litigation. 

  3. ESG Catch-22 – Financial services providers, especially publicly traded ones, may find themselves in the Environmental, Social and Corporate Governance (ESG) crossfire. Investors, the Securities and Exchange Commission (SEC), and other regulators will continue to scrutinize ESG disclosures for accuracy, transparency, and accountability. Meanwhile, a decision not to lend or invest in a particular industry for ESG purposes may prompt pushback, including litigation by the disfavored industry participants and some state Attorneys General. 

  4. Fintech and Crypto Market Uncertainty Will Continue to Impact Financial Institutions – Financial institutions face additional scrutiny as the crypto market appears to unravel. Recent bankruptcies, misleading disclosures by digital assets firms, and other issues create risk for financial firms. Fintech acquisitions and other partnerships will also be scrutinized, creating litigation and enforcement risk for financial institutions.

  5. Aggressive Rule-Making, Enforcement Actions, and Market Volatility Also Contribute to the Path for Increasing Securities Litigation  Financial institutions can expect to see increasing regulatory scrutiny and enforcement actions by regulators that may lead to securities litigation. With continued market volatility, we can also expect to see a continued focus on securities class actions regarding existing issuers and class actions against financial institutions acting as underwriters alleging lack of adequate due diligence, inadequate or misleading disclosures, misrepresentation, or omissions. We expect to continue to see Securities Act cases filed in state courts. Financial institutions should be cognizant of their own disclosures and practices in relation to ESG, privacy and data protection and fraud prevention.

About the Authors

Greenberg Traurig’s Financial Services Litigation Practice includes more than 100 lawyers who focus on representing financial services companies in virtually all aspects of litigation, including complex criminal and civil litigation, class actions, regulatory matters, and investigations. Using our international platform and deep experience in this area, our team represents clients across a broad spectrum of financial services, including national- and state-chartered banks, investment banks, broker-dealers, private equity and hedge funds, asset managers, trustees and custodians, credit unions, insurance companies, lenders and servicers in the mortgage, auto, and student loan business, credit card issuers, debt collectors, fintech companies, e-commerce companies, and others.