On November 30, 2010, Judge Jed Rakoff of the United States District Court for the Southern District of New York granted ABN AMRO’s and J.P. Morgan’s motions to dismiss claims under Section 11 of the Federal Securities Act of 1933. Although the Court had sustained Section 11 claims against other underwriters on other RMBS in the same litigation, the Court noted that the plaintiffs had not alleged a materially false or misleading statement by ABN AMRO or J.P. Morgan. It stated that their offering “differed materially from the others at issue in that no loan originator contributed more than 20% of the loans” to the offering pool, and, accordingly, no disclosures regarding the underwriting practices of any loan originator were required or included in the offering documents. Decision.
On December 10, 2010, a Plaintiff filed a motion for class certification in an action regarding a $633 million mortgage-backed securities offering by Credit Suisse in 2006. The Plaintiff alleges that it has specifically identified 97 investors who are members of the putative class, and that 569 additional market participants purchased or sold the Certificates since 2006. The case is pending in the United States District Court for the Southern District of New York before Judge Lewis A. Kaplan. Memo of Law.
On December 10, 2010, Judge Richard Kramer of the Superior Court of California, County of San Francisco, issued a tentative bench ruling that ratings issued by Moody’s, S&P and Fitch on structured investment vehicles are a form of protected speech concerning a subject of public interest protected by California’s “Anti-SLAPP law.” According to Judge Kramer, the Anti-SLAPP law is intended to “protect public debate from strategic lawsuits against public interest,” by subjecting suits with the potential to chill protected speech to early scrutiny on their merits. Hearing Transcript.
On December 13, 2010, Judge James Graham of the United States District Court for the Southern District of Ohio granted summary judgment, dismissing several claims brought against Credit Suisse Securities LLC by investors in asset-backed securities issued by National Century Financial Enterprises, Inc. The Court dismissed all claims arising under Ohio’s blue sky laws because, although National Century was an Ohio issuer, the securities were not offered for sale, purchased or sold in Ohio. The Court found that the application of Ohio’s state securities laws in these circumstances would violate the Commerce Clause of the United States Constitution. The Court, however, denied Credit Suisse’s argument that some plaintiffs lacked standing to sue because they no longer held the securities at issue, holding that rescission – the remedy sought by the plaintiffs – is a “purely personal remedy” and “generally not assignable.” Decision.
On December 16, the Basel Committee issued the text of the Basel III rules that present global regulatory standards on bank capital adequacy and liquidity, along with the results of its comprehensive quantitative impact study. Basel Press Release. Basel International Framework for Liquidity Risk. Basel Global Regulatory Framework. Quantitative Impact Study Results.
On December 15, the Fed, OCC, and FDIC requested comments on a proposed rule that would implement changes approved by the Basel Committee on Banking Supervision to revise the market risk capital rules for banking organizations with significant trading activity. Comments are requested within 90 days after publication in the Federal Register. The Fed, OCC, and FDIC also requested comments on a proposed rule that would amend Basel II to be consistent with the Dodd-Frank Act provisions on capital standards. Comments are requested within 60 days after publication in the Federal Register. Agencies Risk-Based Capital Guidelines Release. Agencies Basel II Release.
On December 16, the SEC extended the application of Rule 312 of Regulation S-T, which allows static pool information required to be disclosed in a prospectus of an ABS issuer to be provided on a website under certain conditions. The rule will now apply to ABS filings made on or before June 30, 2012. Final Rule.
On December 15, in accordance with the Dodd-Frank Act, the SEC proposed a rule to specify the steps that end-users must follow to notify the SEC of how they meet their financial obligations when engaging in a security-based swap transaction that is exempt from mandatory clearing. SEC Release. Proposed Rule.
On December 15, in accordance with the Dodd-Frank Act, the SEC proposed a rule to specify the process registered clearing agencies must use to submit security-based swaps for review and the type of notice the clearing agencies must provide. Proposed Rule.
On December 13, in accordance with the Dodd-Frank Act, the Fed proposed rules to amend Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) to apply to consumer credit transactions and consumer leases of up to $50,000 (up from $25,000), effective July 21, 2011. Comments must be submitted by the later of February 1, 2011 or 30 days after publication of the proposals in the Federal Register. Fed Release. Reg Z Proposal. Reg M Proposal.