Alert February 19, 2009

Decreased Consumer Confidence May Bring About Stricter Privacy Regulations

From the beginning of the financial crisis, when the subprime mortgage market first began to unravel, to the takeover of Fannie and Freddie and the bankruptcies of Bear Stearns and Lehman Brothers, consumer confidence has been in steady decline. Now comes news that Bernard Madoff, one of the most trusted and established names on Wall Street, allegedly committed fraud. More troubling is that Madoff was able to operate his alleged scheme, despite being investigated twice by the SEC. These events have created a perfect storm, shaking consumer confidence and changing consumers’ mindsets for the foreseeable future.

So what does financial consumer confidence have to do with privacy regulations? The firms and individuals who were affected by the financial crisis were some of the most trusted in the industry and ones that had operated successfully for many years. Financial consumers, therefore, will be far more skeptical as to who they allow to handle their money. This level of scrutiny is likely to carry over to increased demand for dotting I’s and crossing T’s when it comes to consumers’ personal information. Gone are the days when consumers will place blind trust in those with access to their money and information.

Goodwin Procter has been closely monitoring the investigation of alleged fraud related to Bernard L. Madoff Investment Securities and is representing a number of clients in connection with this matter. Our deep experience representing the financial services industry, coupled with our expertise in the white collar, tax, bankruptcy, SEC enforcement and litigation areas, uniquely positions us to represent both institutional and individual clients in connection with this matter.