Journal of Investment Compliance

Purpose – The purpose of this paper is to illustrate the regulatory challenges that financial institutions around the world face in entering the US market.

Design/methodology/approach – The paper provides examples of the intricacies in US banking regulation that a financial institution has to think though as it considers buying US assets, including selected provisions of the Bank Holding Company Act, the nature of Federal Reserve jurisdiction and supervision, competition among various federal and state regulators, and dangers related to class action suits and intrusive discovery in civil proceedings.

Findings – The paper finds that as soon as a foreign bank buys or opens a US bank, it becomes a bank holding company under Federal Reserve jurisdiction. Often there is competition among regulators; securities markets are mostly regulated at the national level, but each state also has its own code. Another new factor is cooperation among international law enforcement agencies. Class actions and intrusive discovery, for example tens of millions of pages of e-mail records, are the most expensive potential problems.

Originality/value – The paper contains guidance and insight from experienced financial services lawyers.