By Pinchus Raice and Dustin Nofziger ( November 3, 2017, 12:29 PM EDT) -- Financial institutions and their legal counsel may be surprised to learn that the New York State Department of Financial Services (DFS) asserts that financial institutions are prohibited from disclosing confidential supervisory information (CSI), such as reports of examination, to their outside counsel absent DFS' prior written authorization. The reader may be even more surprised to learn that the source of DFS' proclaimed authority — Section 36.10 of the New York Banking Law — does not appear to support DFS' contention. Nor has DFS responded to the instant authors' recent requests to explain how Section 36.10 could possibly restrict a financial institution from confidentially disclosing CSI to outside counsel for the purpose of obtaining legal advice. As a result, DFS' interpretation of Section 36.10 appears to be ripe for judicial challenge. The language and history of Section 36.10 suggest that it was never meant to prevent financial institutions from confidentially disclosing CSI to their outside counsel....