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Welcome back everyone. So Anaya is out exploring the sponsor showcase area,

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and she's interviewing people.

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And now we're gonna get started with our red carpet interview.

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So right now I'm here with Scott Pearson. Scott,

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thank you so much for joining us. So, uh,

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go ahead and walk me through who you're with and why you're here today.

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Well, I lead the, uh,

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consumer financial services group at Manat Phelps and Phillips,

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which is a big national law firm. We do quite a lot of work in the M C A space.

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Um,

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many years ago I defended some very significant class actions against some of

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the original players in the M C A space. And since that time,

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a lot of companies have come to us to write their contracts and help them with

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compliance work and that sort of thing.

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So I was asked to speak about legal and regulatory developments today. So

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Let's talk a little bit about that.

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That's been a hot topic on everyone's mind in this industry specifically.

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Excuse me, that's been on everyone's mind. So, uh,

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what exactly what are the key points are gonna be discussing today?

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Well,

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we're gonna spend a lot of time talking about the commercial disclosure laws

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that have been proliferating around the country, uh, started in California,

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then New York, several other states have adopted them,

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and there are more on the way. So we're gonna talk about that.

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We're gonna talk about some other developments in terms of greater

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regulation of commercial financing. I mean,

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the idea is a lot of people think that certain small business borrowers are more

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like consumers than they are like a big company like an I B M or General Motors.

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And so, uh, the view is that they may be more in need of protection,

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and so there's more and more laws being passed to regulate those companies.

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There was a rulemaking in California recently that was pretty important,

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so we'll talk about that as well.

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So for those watching at home, what's one takeaway they can, uh, receive, uh,

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since they're not gonna be able to see it in person, uh,

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and that they work in the industry? So what's a takeaway that you have, uh,

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to give to them?

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Well,

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I just think it's important to always be focused on compliance and to understand

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that, you know, no matter how successful you are with your business,

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a lot of your successes can be clawed back by regulators if you're not doing

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things the right way. So it's important to get good advice,

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make sure that you know,

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your contracts are compliant and that you're complying with the laws that apply

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to this business.

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And for those people that are starting out in the industry,

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that are watching this at home and they can't, uh, you know,

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get up to date with their compliance or they're trying to figure out how to

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maneuver that, what do you say to them?

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Well,

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I would say we see a lot of young companies cobbling contracts together from

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things they find on the internet,

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and it's a good way to get yourself in trouble. There are some, uh,

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some places that you can go to get some, uh,

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less costly advice to get you started. Uh,

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and I think it's important to make that part of the, the startup cost of,

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of a new company.

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And I think this is very important to ask, you know, for those individuals that,

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uh,

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are pretty much not taking into consideration the disclosure laws or that say,

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all right, you know, that popped up in California, New York, New Jersey,

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we're gonna not do business there.

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But obviously you and I both know that that is a common theme that it's popping

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up everywhere. So if you're trying to avoid it, what do you say to those guys?

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Well, I don't think they're crazy. There,

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there are a lot of states that are seeing less credit availability or less

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financing availability because of the way that they're regulating industries.

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I mean, in Colorado, for example,

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we're seeing lots of consumer lenders pull out of that state because of

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different things that they've done thinking that they're protecting consumers.

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We're actually, they're just taking away choices.

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So it's not a crazy thing to do.

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It's hard to do it in places like California and New York because the markets

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are so big. People really want to operate in those states.

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But if you wanna operate in California, if you wanna operate in New York,

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it's gonna be more costly because there's a lot more, uh,

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regulation that you need to be aware of. And

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You have seen the different, you know, trends, you know,

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you've seen how the different patterns of this unfolding. Uh,

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what would you say is something that you've, that has surprised you, uh,

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with the disclosure specifically speaking about that?

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Well, uh, I don't know if anything's really surprised me.

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I I think that there have been some efforts, um, by some

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People in certain circles trying to get states to pass more of these laws.

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And I think some of those efforts have really been misguided. I, I, I think, uh,

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I'd like to see that not happen.

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And I think there's too much infighting in the finance world. And,

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and the biggest problem in the finance world is there are certain companies that

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think, I don't have to outrun the bear.

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I just have to outrun this guy next to me and I'm gonna trip him.

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And that's not a good idea. Um, what,

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what ends up happening is you just create a more poisonous climate for everybody

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when you do that.

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And it would be good if we could find some common ground among all the different

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finance companies and, and all try to row in the same direction.

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And for your business, I mean, let's talk a little bit more about your business.

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How has it developed this year? I mean, how, you know, you,

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you're in a very specific niche area.

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So kind of walk me through what you've seen business owners in this business,

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uh, what have they been doing? Kind of walk me through all that.

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Well, I think that there are some companies that are aggressively focused on

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compliance and trying to get up to speed with disclosure laws because when you

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go to raise money from capital providers,

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they're gonna insist that you be compliant.

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And if you haven't done that ahead of time,

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then you've got some catching up to do.

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So we're seeing quite a few companies in investing in that space.

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I think interest rates being higher has,

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has obviously dampened business activity.

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We're seeing fewer transactions and we're seeing a lot more litigation and we're

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seeing a lot more enforcement activity from regulators, uh,

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is what I would say. Awesome.

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Well, Scott, thank you so much for your time. I appreciate you sharing what, uh,

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you're doing here today and your words of wisdom. So thank you.

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I'll go ahead and let you enjoy the rest of the conference.