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July 02, 2009

Payor Bank Responsible for Payment over Stamped Unauthorized Fax Signatures: Lor-Mar/Toto, Inc. v. 1st Constitution Bank

Lor-Mar Toto Inc. (“Lor-Mar”) authorized its bank to honor checks bearing the stamped facsimile signature of either its president or vice president and provided the bank with samples of facsimile signatures. In June 2002, the bank paid five checks bearing a stamped facsimile signature of Lor-Mar’s president as well as an illegible signature. These checks differed from Lor-Mar’s usual checks in that they were printed on a different stock, were of a different color, and purported to have different security features. The checks also contained duplicate numbers of legitimate checks previously issued by Lor-Mar and contained other inconsistencies with authorized Lor-Mar checks. The court assumed that the checks were produced by using desktop publishing technology with an actual check of Lor-Mar as a model. Each of the checks was issued in an amount below the bank’s $5,000 threshold for manual signature review. The bank paid the checks, and Lor-Mar sought recredit of its account on the grounds that the checks were unauthorized. (The bank was able to recover some of the funds represented by the unauthorized checks from depositary banks. It was unclear under what theory the payor bank of an unauthorized instrument was able to obtain such recovery.)

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Posted in Fraud Protection & Payment Systems Law on Thursday, July 02, 2009

November 12, 2007

Protecting Confidential Information Without a Noncompete — It Can Be Done

Noncompete agreements are not the sole, and certainly not always the best, means for employers to protect the confidentiality of their information. As the author explains, other options can provide equally effective protection without the public policy struggles sometimes found in noncompete litigation.

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Posted in Compliance on Monday, November 12, 2007

November 05, 2007

Extraterritorial Application of the USA PATRIOT Act and Related Regimes: Issues for European Banks Operating in the United States

The author reviews the background and scope of the USA PATRIOT Act and discuss the interplay of the anti-money laundering statutes and regulations and the combat of terrorist financing provisions with the U.S. financial sanctions regimes. The author also highlights the resulting legal issues affecting the business operations of foreign banks, especially those headquartered in the Member States of the European Union with substantial business interests in the United States, and explains that the issues largely center around correspondent account transactions and clearing issues as well as home and host country compliance conflicts resulting from significant differences between EU and U.S. boycott and data protection regimes.

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Posted in Security on Monday, November 05, 2007

November 04, 2007

Uncertainty as to Whether Check Is Counterfeit or Altered Resolved in Favor of Alteration

Bank of America, N.A. v. Mazon State Bank

We have previously reported on the conflict that arises when there is uncertainty about whether an allegedly unauthorized check that a bank has paid is a counterfeit or an altered check actually issued by the bank’s customer.

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Posted in Operations on Sunday, November 04, 2007

August 28, 2007

Whose E-Mail Is It Anyway?

The author explains when employers likely may disclose employee e-mail to the government, while observing that there still are questions regarding whether e-mails are privileged or protected by the Fourth Amendment.
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Posted in Security on Tuesday, August 28, 2007