On December 13, the SEC extended the comment period for proposed Rule 127(b) that, pursuant to Section 621 of the Dodd-Frank Act, would prohibit material conflicts of interest in securitizations. Comments on the proposed rule must now be submitted by January 13, 2012. SEC Release. Proposed Rule.
On December 23, 2011, the Fed issued a final notice providing a two-year phase-in period for most savings and loan holding companies (SLHCs) to submit regulatory reports similar to those collected from bank holding companies, and exempting certain SLHCs from having to file this new type of report. Fed Release.
On December 23,the Fed, FDIC, OCC, and SEC extended the comment period on proposed regulations implementing the Volcker Rule to February 13. The Volcker Rule requires regulators to implement restrictions on the ability of banks and nonbank financial companies to engage in proprietary trading and to have certain interests in, or relationships with, hedge funds or private equity funds. Interagency Release.
On 22 December 2011, ESMA published two new Consultation papers: one on the MiFID I suitability requirements (ESMA Consultation Paper 2011/445), the other on the MiFID I compliance function requirements (ESMA Consultation paper 2011/446). The draft guidelines on stability requirements focus on firm policies and procedures in relation to recommending suitable investment choices. The draft guidelines on the compliance function addresses the MiFID I organisational requirements and are also aimed at reinforcing the importance of the compliance function. Responses to the two consultation papers may be submitted for consideration by ESMA in Q1 2012. The final report and guidelines are expected in Q2 2012.
On 22 December 2011, the European Securities and Markets Authority (ESMA) published its Final Report on Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities. The guidelines will become effective one month after the publication by the relevant national competent authority. According to this schedule, market participants should ensure that they are compliant with the guidelines from 1 May 2012. ESMA Final Report 2011/465.
On December 21, the SEC extended interim final temporary Rule 15Ba2-6T, providing for temporary registration of municipal advisors under the Exchange Act, from December 31, 2011 to September 30, 2012. SEC Rule.
On December 21, pursuant to Section 413(a) of the Dodd-Frank Act, the SEC amended several rules under the Securities Act, the Investment Company Act, and the Investment Advisers Act to exclude the value of an individual’s home from net worth calculations used to determine whether such individual qualifies as an accredited investor. The amendments also: (i) clarify the treatment of loans secured by a primary residence for purposes of this new net worth calculation and (ii) permit individuals who qualified as accredited investors under the prior definition of accredited investor to use the previous net worth standard for certain follow-on investments. The amendments will be effective on February 27. SEC Release. SEC Final Rule.
On December 20, 2011, Judge S. Arthur Spiegel of the Southern District of Ohio granted the plaintiffs’ motion to remand and denied Morgan Stanley’s motion to transfer to the Southern District of New York an RMBS suit based on the alleged failure to disclose claimed departures from underwriting guidelines. The court found that related-to bankruptcy jurisdiction did not exist given that Defendants had not filed indemnification claims in the bankruptcy of the sole bankrupt originator prior to the bar date. Plaintiffs, which include the Western and Southern Life Insurance Company, bring claims under Section 11 of the Securities Act and Ohio securities blue sky laws. Decision.
On December 20, pursuant to Sections 165 and 166 of the Dodd-Frank Act, the Fed proposed rules implementing new requirements for bank holding companies with consolidated assets of $50 billion or more and systemically important nonbank financial firms. The proposed rules address several measures, including: (i) risk-based capital and leverage requirements; (ii) liquidity requirements; (iii) stress tests; (iv) single-counterparty credit limits; and (v) debt-to-equity limits for companies that pose a grave threat to financial stability. Comments must be submitted by March 31. Fed Release.
On December 20, pursuant to Sections 727, 728, and 729 of the Dodd-Frank Act, the CFTC adopted final rules establishing swap data recordkeeping and reporting requirements for swap data repositories, derivatives clearing organizations, designated contract markets, swap execution facilities, swap dealers, major swap participants, and swap counterparties that are neither swap dealers nor major swap participants. The final rules will be effective 60 days after issuance. CFTC Fact Sheet. CFTC Final Rules.