Manatt Financial Services Partner Scott Pearson spoke with Law360 about New York’s procedural defeat in its Second Circuit battle against a federal fintech bank charter. The publication reported that the Second Circuit overturned a 2019 ruling, essentially sending New York Department of Financial Services’ back to square one and marking the fourth time in as many years that such a state regulator-backed lawsuit has stumbled on standing and ripeness grounds. “The reality is that until someone actually applies for the fintech charter, at a minimum, I just don’t think there’s a case or controversy in federal court,” Pearson explained. “So to me, this was pretty obvious. What was surprising was the district court’s ruling, not the Second Circuit's ruling.” He also warned that by simply bringing these lawsuits, New York and the other states are deterring fintechs from applying for the charter from the outset.
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