Legal Question in Banking Law in New York

Question: How can an equity for services agreement be structured between a FDIC insured Bank and a start-up financial intermediary?

We are a start-up financial intermediary that will work with an FDIC insured partner banks who will provide us their products to white label. Banking regulations befall on them and not us as we're a customer facing platform and they are the back-end and responsible for the deposits, underwriting etc. The bank wants to have an equity stake in us and in return they will offer their services which will allow our platform to integrate with theirs. Need advise on how to best structure an equity structure with them without having any banking regulations befall on our company. Also, I don't believe they will be allowed to have direct equity in a partner company, but perhaps it can be worked out via a subsidiary, but not sure if that will solve the problem as well. Need advice on how to make this equity for service agreement materialize with them.


Asked on 5/01/14, 9:24 pm

1 Answer from Attorneys

Roman Fichman Esq. Law Practice of Roman Fichman Esq.

Generally speaking, just because a bank is FDIC insured does not necessarily preclude the bank from entering into equity based transactions. However, depending on the business proposition between you and the bank, there may well be state and federal regulations that could limit the bank's involvement.

Regardless of FDIC, structuring equity offerings is fairly complicated, even for startups. And if one adds to it the complication of a bank, as the business partner, then my recommendation is that you retain a startup attorney to help with this.

My practice is focused on tech startups. Feel free to reach out as soon as practicable.

Roman R. Fichman, Esq.

www.TheLegalists.com │ @TheLegalist

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Answered on 5/02/14, 7:29 am


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