Author: Kelly Somers

Pastore LLC Welcomes Senior Counsel and Summer Class

Posted on by Kelly Somers

On Tuesday, May 31st, Pastore LLC welcomed senior counsel and our summer class to the firm.

Pastore LLC is pleased to welcome Robert Knight as Senior Counsel. Mr. Knight has a wide range of legal experience. Bob was an elected official Municipal Judge serving two four-year terms. Indiana US Senator Richard Lugar, then Mayor of Indianapolis, administered his Oath of Office on each occasion he was elected to office. As Claim Counsel for Aetna Property and Casualty Company, Bob managed national litigation supervising hundreds of trial lawyers and thousands of lawsuits.  Bob also as Federal Regulatory Affairs Counsel company spokesperson before federal agencies concerning matters of insurance. As Environmental Coverage Counsel for The Hartford Insurance Company, Bob assisted in structuring the settlement of two five billion dollar aquifer contamination claims. As Special Counsel to Abbott Labs, Bob worked with the principal scientist inventor of Humira documenting patent royalty agreements antecedent to a multibillion Humira patent royalty dispute with Cambridge Antigen Associates in England, co- developer of Humira. Bob is rated a Martindale Hubbell AV Preeminet lawyer where he is ranked in the top 5% of lawyers and American Registry where he is ranked in the top 1% of lawyers in legal ability and ethical standards.

Rachel Neff has returned to office as our Summer Associate. She worked with Pastore as a Law Clerk since September of 2021. She took a break for her finals, a trip home to California, and some time off to enjoy some hiking at our National Parks. She will be full time for the summer.

Stewart Stockdale Jr. joined us as our full time Summer Law Clerk. He completed his first year of law school at the Indiana Maurer School of Law. He graduated from Tufts University in 2019. He spent the two years prior to law school working at Merrill Lynch in White Plains.

Christopher Atuahene joined us as our Summer Law Clerk. Chris completed his first year of law school at New York Law School. He graduated from Southern Connecticut State University in 2020 with a Bachelor’s degree in Philosophy.

Pastore has LLC also welcomed Dan Melillo, as our Summer Law Intern. He finished his Junior year at Skidmore College as a Political Science major with an Education Minor. Dan looks forward to going to Law School upon graduation.

Pastore Sponsors Connecticut Crypto Forum

Posted on by Kelly Somers

The Connecticut Crypto Forum has recently been created to advance education and knowledge in this new asset class. The forum will connect large and sophisticated capital pools with leading players and thinkers across the crypto, delfi, and Web 3.0 market to strengthen investor knowledge, understanding, and skill. The mission of the forum is to build a diverse, sophisticated, Connecticut-based community interested in crypto from many angles.

On May 13, 2022, the Connecticut Crypto Forum will be conducting an invite-only session for those interested in the forum to partake in. Pastore LLC is proudly a founder and sponsor of the Connecticut Crypto Forum.

Learn more about Pastore’s Crypto practice

 

 

 

Pastore Calculates RAUM of over $1 Billion for Registered Investment Advisor

Posted on by Kelly Somers

This past month, Pastore LLC assisted a registered investment advisor (RIA) with the filing of its Form ADV.  In connection therewith the firm assisted the RIA in its calculation of regulated assets under management (RAUM), which totaled over $1 billion. The Securities and Exchange Commission (SEC) uses RAUM as its  measurement of assets for registration purposes. However, RAUM has  sometimes been misunderstood as representing total assets under management (AUM) for a company, and based on the firm’s experience the SEC itself has sometimes confused RAUM with AUM.  RAUM does not include every type of asset that an RIA may manage, and in particular may not include certain real estate investments or investments in portfolio companies controlled by the fund.  When assessing the financial condition of an RIA and its funds, it is important to distinguish between the assets counted under RAUM and the assets counted under AUM.  An RIA that appears to manage a small volume of assets based on its RAUM may in fact manage a much larger volume of assets based on total AUM.

Pastore Files Appeal in New York’s First Department Appellate Division

Posted on by Kelly Somers

Recently, Pastore LLC perfected its appeal in New York’s First Department Appellate Division. Pastore LLC represents a celebrity chef in the matter, which involves a contract dispute dealing with election of remedies issues. The chef is well known and has high-end restaurants in New York and Las Vegas, and the issue in the case involves some of his historical publicity. Ultimately, the matter involves sophisticated contractual provisions, and thus the chef hired Pastore LLC to handle these contractual agreements.

Weighing the Carbon Footprint of Cryptocurrency

Posted on by Kelly Somers

Cryptocurrency (“Crypto”) is a virtual form of currency that functions through a decentralized system to record transactions and uses encryption, rather than an entity such as a bank, to verify transactions.[1] Crypto’s first mark on the digital world was in 2009 through Bitcoin, which remains the best-known form of Crypto today.[2] Crypto is created through a process known as mining, which involves downloading a unique software that contains all transactions that have taken place through that specific network.[3]

Crypto has had a profound effect on the global economy and has altered our world’s view of currency and financial transactions in general. Any investor with access to the internet can purchase cryptocurrency.[4] Additionally, over 15,000 businesses worldwide now accept Crypto as a form of payment, which has altered the availability of transactions to interested purchasers.[5] A study conducted by Forester Consulting on Crypto using the Total Economic Impact methodology demonstrated that 40% of customers that used Crypto as their form of currency were new customers to the merchant, evidencing intriguing information that Crypto is affording access to new transactions to new demographic groups.[6]

Despite the numerous advantages that Crypto has offered globally, Crypto’s high demand comes at the cost of an impact on our environment, which is currently being addressed at a federal executive level. The process of mining all Crypto was initially designed to be capped at 21 million units; however, the number of units available to mine has caused an increase in computation power exerted in order to mint new units of Crypto.[7] The estimated carbon footprint stemming from a single crypto transaction is estimated to burn 2,292.5 kilowatt hours of electricity, which equates to the amount of power the average U.S. household uses over the course of 78 days.[8] No payment system is foolproof in completely abolishing its carbon footprint and CO2 emissions. However, compared   to VISA, which is another payment system, the average Crypto transaction requires 200,000 times more energy consumption.[9]

The substantial footprint of Crypto is acknowledged by the current administration, which has prioritized climate change mitigation. [10] In an Executive Order on “Ensuring Responsible Development of Digital Assets” which took place on March 9, 2022, United States President Joe Biden addresses the resulting environmental pollution from Crypto and Crypto mining and implements a plan alongside many federal agencies such as the Environmental Protection Agency.[11] The Executive Order recognizes the benefits of Crypto financial markets for consumers, investors, and businesses, however addresses the responsibility the United States has to mitigate contributions to climate change and pollution.[12]

To reach these goals and assure that Crypto’s harms to not outweigh its benefits, and to learn more about how to stray away from harms, the Executive Order calls on the Director of the Office of Science and Technology Policy to prepare a report to the President within 180 days, specifically addressing “the connections between distributed ledger technology and short-, medium-, and long-term economic and energy transitions; the potential for these technologies to impede or advance efforts to tackle climate change at home and abroad; and the impacts these technologies have on the environment…The report should also address the effect of cryptocurrencies’ consensus mechanisms on energy usage, including research into potential mitigating measures and alternative mechanisms of consensus and the design tradeoffs those may entail.[13]

The damages Crypto could potentially have large effects on climate change and the state of our environmental crisis. However, mitigating Crypto pollution is not an impossible feat. Government encouragement in developing sustainable technologies can have social and economic benefits to the Crypto market and remove the serious threat that Crypto can pose to the emission of greenhouse gases and its carbon footprint.[14]

[1]What is Cryptocurrency and How Does it Work?, Kaspersky, “https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency”>https://www.kaspersky.com/resource-center/definitions/what-is-cryptocurrency (Last visited March 17, 2022)

[2]Id.

[3] Jake Frankenfield, Cryptocurrency, Investopedia (Jan. 11, 2022) https://www.investopedia.com/terms/c/cryptocurrency.asp#:~:text=Cryptocurrencies%20are%20generated%20by%20mining,have%20occurred%20in%20its%20network.

[4] Jim Probasco, What to Know About Investing in Crypto Exchanges, Investopedia (Nov. 30, 2021) https://www.investopedia.com/buying-and-selling-4689764

[5]Who Accepts Bitcoin and Ether Cryptocurrencies, Currency Exchange International (May 12, 2021) https://www.ceifx.com/news/who-accepts-bitcoin-and-ether-cryptocurrencies#:~:text=More%20than%2015%2C000%20businesses%20worldwide,Microsoft%2C%20AT%26T%2C%20and%20Wikipedia.

[6]Forrester Study Shows Accepting Crypto Attracts New Customers and Boosts AOV, Forrester (Aug. 6, 2020) https://bitpay.com/resources/forrester-report-says-bitpay-adds-new-sales-and-2x-aov/

[7] John Bogna, What is the Environmental Impact of Cryptocurrency? PCMag (Jan. 8, 2022) https://www.pcmag.com/how-to/what-is-the-environmental-impact-of-cryptocurrency#:~:text=The%20environmental%20concern%20comes%20from,household%20for%20over%2078%20days.

[8]Id.

[9]Bitcoin Energy Consumption Index, Digiconomist (2022) https://digiconomist.net/bitcoin-energy-consumption

[10] Executive Order on Ensuring Responsible Development of Digital Assets (Mar. 9, 2022), https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/.

[11] Executive Order, § 5(b)(vi)

[12] Executive Order, § 1

[13] Executive Order, § 5(b)(vii)

[14] Jon Truby, Decarbonizing Bitcoin: Law and Policy Choices for Reducing the Energy Consumption of Blockchain Technologies and Digital Currencies, 44 Energy Rsch. Soc. Sci. 399 (2018) (Discussing the benefits of Crypto and how the harms can be avoided through commitment to positive government intervention choices).

International, Alternative Methods of Service in a Modern, Mid-Pandemic Society

Posted on by Kelly Somers

The Federal Rules of Civil Procedure (the “FRCP”) provide the common process in which an individual may serve another party. The FRCP provides means to achieve proper service of process of an individual located outside of the United States, which differs from serving a national defendant. The FRCP allows a party, in serving an international party, to take measures such as “any internationally agreed means of service that is reasonably calculated to give notice,” “as prescribed by the foreign country’s law for service in that country in an action in its courts of general jurisdiction,” “as the foreign authority directs in response to a letter rogatory or letter of request,” and more.[1] Rule 4(h) provides further for service of process of an international corporation.[2] The Hague Convention has been widely regarded as the as a primary organization to utilize to serve an international party.[3]

While the FRCP rule dictating service of process appears to list a wide range of methods to serve an international party, serving an individual in a different country can raise difficulty in practice, and challenges in doing so have increased. Delays in services of process are common as a result of the COVID-19 pandemic, fashioning conditions where serving a party in another country is nearly impossible. It can be ambiguous on how to conduct international service where the methods listed in FRCP Rule 4 have been exhausted.

In Group One Ltd. V. GTE GmbH et al.[4],a recent decision in the Second Circuit, the court weighed in on the issue of international service and reaffirmed prior decisions that the Hague Convention is not the only means one can pursue to successfully serve a foreign party.[5] The court agrees that FRCP Rule 4 controls service of process, however it does not create a hierarchy on the best or most preferable means to serve a foreign defendant.[6] Additionally, it is established that means listed in Rule 4(f) need not be exhausted prior to seeking permission allowing alternative service from the court.[7]

This decision also deliberates E-mail as an alternate means for service under FRCP Rule 4, and the court authorizes this method to serve foreign defendants. [8] It is required that the service is likely to reach the defendant in order to comport with due process, and E-mail service is valid in order to satisfy this requirement. [9] More surprisingly, the court decides that E-mail service may be the most reliable and efficient method to accomplish service, as “[a]lthough emails may get lost in a defendant’s spam folder, compared to postal mail, emails are more reliable.[10]

The pandemic and its global effect has contributed to widespread delays in service of process. While ordinary and anticipated delays will arise while serving a foreign party even in the absence of a global pandemic, the courts do not aim to make serving a foreign party impossible by restricting alternative means to precedent or the plain language of FRCP Rule 4. Today, we are observing courts strive to put plaintiffs serving foreign parties at ease by interpreting service of process rules in a way that takes into account the current state of the world today.

During a time where the pandemic is triggering delays in all realms of everyday life, and the growing age of technology and communication via E-mail, the courts in many jurisdictions have encouraged plaintiffs to use E-mail as an alternative method of service.

[1]Fed. R. Civ. P. 4(f)

[2]Fed. R. Civ. P. 4(h)

[3]Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, art. 1, Nov. 15 1965, 20 U.S.T. 361, The Hauge Convention

[4]523 F.Supp 3d 323 (E.D.N.Y., 2021)

[5]Id. at 341

[6]Id.

[7]Id. at 341

[8]Id.

[9]Id. at 344

[10]Id. at 345

Congratulations to Joseph M. Pastore III, Recipient of the 2022 AV Preeminent Rating Award

Posted on by Kelly Somers

Pastore LLC proudly announces that for the 12th consecutive year, Martindale-Avvo has awarded the 2022 AV Preeminent Rating to Managing Partner, Joseph M. Pastore III. This honor is the highest possible rating in both legal ability, and ethical standards a practicing attorney can receive. Mr. Pastore has received this honorable award resulting from his dedication to ethical practices, work ethic, and legal abilities he commits to each day as a practicing attorney.

Tokenized Assets: What are They and how are They Regulated?

Posted on by Kelly Somers

As the decentralized world of blockchain continues to grow, tokenized assets have caught the eye of investors and regulators alike. Tokenized assets may be fungible or non-fungible. Fungible tokenized assets are interchangeable and indistinguishable such as Bitcoin and other cryptocurrencies (“Crypto”). Non-fungible tokens (“NFTs”) are unique tokens that are non-divisible and cannot be replaced because each token has a unique value.[1] Tokenized assets result from taking a tangible asset (such as real estate, paintings, and precious metals) or an intangible asset (such as a digital picture or a YouTube video) and converting the asset ownership into a digital token on a blockchain.[2] This process is known as tokenization.[3] By taking a real-world asset and making a digital representation, it creates a broader investor base, geographic reach, and a reduction in transaction times.[4] Moreover, placing the digital token on a blockchain ensures no single authority can erase your ownership in the tokenized asset.[5]

While tokenized assets can allow for a broader base of investors, like the Crypto market, the NFT market lacks clear regulations from the regulatory agencies such as the U.S. Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”).[6] Moreover, state regulatory bodies have yet to issue guidance on the tokenized asset market.[7]

The current legal framework was not designed to regulate and guide the creation and trade of digital assets.[8] Moreover, the question of what category an NFT falls into depends on the particular asset that was tokenized.[9] For example, the CFTC has stated that renewable energy credits and emission allowances are commodities as defined by the Commodity Exchange Act.[10] However, the SEC has stated that depending on the facts and circumstances of a given NFT, it might be considered an investment contract under the Howey test, which would cause the NFT to be regulated under the Securities Act of 1933 and Securities Exchange Act of 1934.[11] The legal uncertainty within the NFT market led SEC Commissioner Hester Peirce to recently state that guidelines would help provide the public with an understanding of how the SEC is approaching these issues.[12] The lack of a clear regulatory framework has made investors susceptible to fraud, and it allows for bad actors to avoid domestic and international anti-money laundering laws.[13]

Additionally, there is no standardized set of rights that accompanies an NFT since the seller determines what rights follow the NFT.[14] Therefore, sellers and buyers alike should understand the limitations that a transfer, assignment, or license may have on the NFT.

While tokenized assets allow for quick cross-border investment and increased liquidity of real-world assets, investors are left without a clear regulatory framework and, at times, not knowing what rights follow the purchase of an NFT. As the decentralized world of blockchain continues to grow, it is imperative that investors and businesses use common sense, sound legal advice, and diligence to navigate this market. Given the lack of legal certainty, attorney legal opinions on these assets will likely immunize any reasonable use.

[1] Tokenization: Opening Illiquid Assets to Investors, BNY Mellon (June 2019), https://www.bnymellon.com/us/en/insights/all-insights/tokenization-opening-illiquid-assets-to-investors.html.

[2]Id.

[3]Id.

[4]Id.

[5] What is asset tokenization?, Hedera, https://hedera.com/learning/what-is-asset-tokenization#:~:text=Asset%20tokenization%20is%20the%20process,either%20digital%20or%20physical%20assets.&text=Asset%20tokenization%20could%20convert%20ownership,0.0002%25)%20of%20the%20property (last visited Feb. 3, 2022).

[6] William de Sierra-Pambley, Tokenization: Opportunity and Regulation, Finding a Balance, Sheppard Mullin (Oct. 18, 2021), https://www.jdsupra.com/legalnews/tokenization-opportunity-and-regulation-5158893/.

[7]Id.

[8]NFTs: Key U.S. Legal Considerations for an Emerging Asset Class, Jones Day (April 2021), https://www.jonesday.com/en/insights/2021/04/nfts-key-us-legal-considerations-for-an-emerging-asset-class.

[9]Id.

[10]Id.

[11]Id.

[12] Sarah Wynn, SEC’s Peirce says agency guidance on nonfungible tokens needed, Roll Call (Jan. 25, 2022), https://rollcall.com/2022/01/25/secs-peirce-says-agency-guidance-on-nonfungible-tokens-needed/.

[13]NFTs: Key U.S. Legal Considerations for an Emerging Asset Class, supra note 11.

[14]Id.

Examiner’s Report Supports Pastore’s Client’s Claims Involving a High-End Westchester Development

Posted on by Kelly Somers

Pastore LLC represents a large creditor and owner of a construction management company in a bankruptcy matter in the Southern District of New York where a billionaire filed bankruptcy to avoid liability to his business partner, Pastore LLC’s client, concerning high-end developments in Westchester and Connecticut. Pastore LLC with co-counsel made a motion to have an examiner review the company’s finances. The examiner’s report indicated that he owes millions back to the bankruptcy estate.