On August 8, the SEC proposed an amendment to Rule 146 to designate certain securities on BATS Exchange, Inc. as covered securities for purposes of Section 18 of the Securities Act of 1933, therefore exempting such securities from state law registration requirements. Comments must be submitted within 30 days after publication in the Federal Register. SEC Proposed Rule.
Month: August 2011
Fed Interim Final Rule on Regulations for SLHCs
On August 12, the Fed issued an interim final rule establishing regulations for savings and loan holding companies (SLHCs) in connection with the transfer of supervision and regulation of SLHCs from the OTS to the Fed pursuant to Section 312 of the Dodd-Frank Act. The interim final rule will be effective upon publication in the Federal Register. Comments must be submitted by October 27. Fed Release. Interim Final Rule.
MSRB Request for Comment on Disclosure Rules
On August 10, the MSRB requested comment on: (i) extending its rule on advertisements to cover municipal advisors and (ii) requiring municipal advisors to evidence their engagements in writing and make certain required disclosures. Comments must be submitted by September 14. MSRB Release.
FSA Consultation Paper on Recovery and Resolution Plans
On August 9, the FSA published a Consultation Paper and Discussion Paper regarding the implementation of Recovery and Resolution Plans by systemically important banks and large investment firms in the UK. The goal of the paper is to present proposals on what is expected of a firm in planning for stress events that would require it to take action to recover or, if necessary, wind-down in an orderly manner without putting UK taxpayers at risk of loss. FSA Release. FSA Consultation Paper and Discussion Paper.
SEC Whistleblower Program Now Effective
On August 12, the SEC whistleblower program, established pursuant to Section 922 of the Dodd-Frank Act, became effective. In connection with the commencement of the program, the SEC launched a new website for whistleblowers to report violations of the federal securities laws and apply for financial awards. SEC Release. SEC Whistleblower Website.
FHFA, Treasury, and HUD Request for Input on Disposition of REO Properties
France, Belgium, Spain, and Italy Introduce Short Selling Restrictions
S&P Downgrade of U.S. Credit Rating
On August 5, S&P downgraded the sovereign credit rating of the United States to ‘AA+‘ from ‘AAA’, and stated that the outlook on the long-term rating is negative. S&P cited the prolonged controversy between Congress and the Obama Administration over raising the statutory debt limit, and the rising public debt burden as reasons for the downgrade. S&P also published a list of ratings actions on Organizations, Issues (including U.S. Public Finance), Insured Bonds, and Funds that were affected by the rating downgrade. S&P Release on Downgrade. S&P Rating Action Related Information.
On August 5, the Fed, FDIC, NCUA, and OCC announced that, for risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government-sponsored entities will not change as a result of the downgrade by S&P. Agencies’ Joint Release.
On August 2, Moody’s confirmed the ‘Aaa‘ government bond rating of the United States following the raising of the statutory debt limit while assigning the rating a negative outlook. Also on August 2, Fitch confirmed its ‘AAA‘ United States sovereign rating but noted that it projects that the United States government debt will continue to rise over the medium term in a manner inconsistent with maintaining a ‘AAA’ rating. Moody’s Release. Fitch Release.
Note: Free registration is required for Fitch, Moody’s and S&P releases.
Several Institutional Investors Sue Countrywide In California Federal Court Over Misstatements Regarding Loan Quality
On July 28, 2011, several institutional investors filed a complaint against Countrywide Financial, Bank of America, several former Countrywide officers, and KPMG in the Federal District Court for the Central District of California. Plaintiffs allege that Defendants made false and misleading statements regarding the quality of loans originated by Countrywide, which allegedly inflated the value of Plaintiffs’ Countrywide securities, in violation of Sections 10(b), 20(a), and 20A of the Exchange Act and Sections 11, 12(a)(2), and 15 of the Securities Act. Plaintiffs opted out of the recently-settled class action against Countrywide to pursue their own claims. Complaint.
TIAA Sues Deutsche Bank for Fraud in New York State Court
On August 1, 2011, Teachers Insurance and Annuity Association of America (“TIAA”) filed a complaint against Deutsche Bank and certain of its affiliates for common law fraud, fraudulent inducement, aiding and abetting fraud, and negligent misrepresentation in the Supreme Court of the State of New York. TIAA alleges that Deutsche Bank made several false representations regarding the quality of the loans contained in the subprime RMBS it securitized and sold to TIAA, despite the fact that members of Deutsche Bank’s trading desk allegedly made disparaging internal statements concerning the quality of Deutsche Bank’s RMBS and developed a short position against those securities. According to TIAA, the loans underlying the RMBS were riskier than Deutsche Bank represented in several aspects, including originators’ adherence to underwriting guidelines, loan-to-value ratios, credit ratings of the RMBS certificates, and status of title transfer. Complaint.