Month: August 2013

Orrick’s Women’s Initiative: Advancing the Conversation

Orrick’s Women’s Initiative invites you to participate in a thought-provoking conversation about the critical role that leaders can play in promoting the professional advancement of women and how women can maximize their success by leaning in to their careers.  Panelists include Lisa Beeson, Head of Real Estate Mergers & Acquisitions, Barclays Capital; Elisabeth DeMarse, Chair, President and CEO, TheStreet, Inc., Sheila Smith, Principal, Deloitte Financial Advisory Services LLP; and Leah Sanzari (Moderator), Partner, Orrick Herrington & Sutcliffe LLP and Co-Chair of Orrick’s Women’s Initiative.  The event will take place on September 18 in Orrick’s New York office.  To register for this event, please click here.

Association of Asian American Investment Managers (AAAIM) New York Regional Event

On September 12, Orrick’s New York office will host the Association of Asian American Investment Managers’ regional event.  Jimmy Yan, board member of the New York City Employees Retirement System (NYCERS), will moderate a panel discussion covering the current state of the economy and potential for future investment opportunities, and Orrick Partner Quinn Moss will speak at this event.  The Orrick guest attendance fee will be waived, using the promotional code “Orrick.”  To register for this event, please click here.

European Banking Authority Publishes Responses to Consultation Paper on the Definition of Material Risk Takers for Remuneration Purposes

The European Banking Authority (EBA) published a list of responses received to its May 2013 consultation paper on draft regulatory technical standards on criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk.  The RTS, if implemented, would widen the definition of staff subject to the most stringent pay regulation, including for the purposes of the CRD IV bonus cap.  The responses are available on the EBA website.  Website.

ESMA Publishes Opinion on Draft Regulatory Technical Standards Under the AIFMD

On August 20, the European Securities and Markets Authority (ESMA) published the opinion it submitted to the European Commission about draft regulatory technical standards (RTS) required under Article 4(4) of the Alternative Investment Fund Managers Directive (AIFMD).

The opinion comes after the Commission’s concerns about ESMA’s approach to the differentiation between open and closed-ended alternative investment funds (AIFs) in the draft RTS.  To alleviate the concerns, ESMA has submitted an amended version of the draft RTS for the Commission’s consideration, which are contained in Annex I to the opinion.

Under the amended RTS, the key element for the identification of an open-ended AIF is the existence of repurchases or redemptions of the AIF’s shares or units prior to the commencement of its liquidation phase or wind-down, provided that the repurchases or redemptions happen at the investors’ request.  Opinion.

FCA Publishes Final Guidance on Oversight of Member Controls by RIEs and MTFs

Following its consultation in April, on August 22, the FCA released its final guidance on the oversight of member controls carried out by recognized investment exchanges (RIEs) and firms operating multilateral trading facilities (MTFs).

The guidance discusses the “risk based” and “proactive” approach the FCA expects RIEs and MTFs to take to ensure ongoing oversight of the systems and controls which their member firms operate to comply with the RIE’s or MTF operator’s rulebook.  Guidance.

The Blue Sky is the Limit for Securities Liability in Washington

Many state securities laws, known as blue sky laws, are patterned after Section 12(a)(2) of the Securities Act of 1933.  The interpretation of these state blue sky laws, however, may diverge significantly from the interpretation of analogous federal securities statutes.  The recent Washington Court of Appeals opinion in FutureSelect Portfolio Management, Inc. et al. v. Tremont Group Holdings, Inc. et al., No. 68130-3-1 (Wn. Ct. App. Aug. 12, 2013), highlights one such divergence in which the scope of potential primary liability for secondary actors under the Washington State Securities Act extends beyond the scope of the federal law on which it was based.  In FutureSelect, a group of Washington state investors (FutureSelect) lost millions of dollars after purchasing interests in the Rye Funds, a “feeder fund” that invested in Bernie Madoff’s Ponzi scheme.  The investors sued Tremont Group Holdings, Inc., the general partner in the Rye Funds and its affiliates, as well as the audit firm Ernst & Young LLP.  For more information and to visit our Securities Litigation blog, please click here.

CUNA Mutual Group Sues To Rescind RMBS Purchases

On August 16, several affiliates of CUNA Mutual Group (CUNA) filed six separate lawsuits in the United States District Court for the Western District of Wisconsin, seeking to rescind their purchases of RMBS from six different financial institutions.  The complaints allege that the defendants made misrepresentations concerning the underwriting guidelines used to originate the mortgage loans backing the RMBS, loan-to-value ratios, and owner occupancy statistics.  CUNA asserts three causes of action in each lawsuit:  rescission on the ground of misrepresentation, rescission on the ground of mistake and unjust enrichment.  Taken together the lawsuits seek to rescind roughly $280 million in RMBS purchases.  Representative Complaint.

Settlement Reached With Liquidators of Bear Stearns Hedge Funds

Several Bear Stearns defendants agreed to undisclosed terms with the joint official liquidators of two Bear Stearns hedge funds, resolving the liquidators’ claims for breach of fiduciary duty, breach of contract and negligence.  The terms of the settlement are undisclosed.  The lawsuit arose out of the failure of the Bear Stearns High Grade Structured Credit Strategies and Bear Stearns High Grade Structured Credit Strategies Enhanced Leverage hedge funds that had allegedly invested heavily in Collateralized Debt Obligations (CDOs) and “CDO-squareds” (CDOs comprised of slices of other CDOs).  The liquidators alleged that the defendants failed to provide adequate oversight and risk management to the funds and placed their own interests ahead of those of the funds.  Complaint.  By virtue of the settlement, the lawsuit was dismissed with prejudice on August 16.  Stipulation.

JP Morgan Sued by Investors Over $1.7B in Mortgage-Backed Securities

On August 21, a collection of investors including Phoenix Light SF Limited, Blue Heron Funding II Ltd. and Kleros Preferred Funding V PLC (the Investors) brought suit against a number of JP Morgan and Bear Stearns entities in New York State Supreme Court.  The Investors allege that JP Morgan and Bear Stearns made misrepresentations in the offering documents for 47 RMBS concerning the underwriting guidelines used to originate the mortgage loans backing the RMBS, loan-to-value ratios, owner occupancy rates, the credit ratings assigned to the RMBS and the transfer of title of the underlying mortgage loans.  The Investors allege that the defendants knew their representations were false by virtue of due diligence performed prior to the securitizations and by virtue of their decision to dispose of substantial subprime assets while simultaneously marketing the RMBS to the Investors as sound investments.  The Investors assert causes of action for common law fraud, fraudulent inducement, aiding and abetting fraud, negligent misrepresentation and rescission based upon mutual mistake.  Complaint.