On April 18, pursuant to Section 721 of the Dodd-Frank Act, the CFTC adopted a final rule authorizing commodity options to transact subject to the same rules applicable to other swaps. In addition, the CFTC adopted an interim final rule providing a trade option exemption for certain physically delivered commodity options used by commercial market participants. The final rule and the interim final rule will be effective 60 days after publication in the Federal Register. The compliance date for the final rule and the interim final rule will be 60 days after further definition of the term “swap” by the CFTC and the SEC. CFTC Fact Sheet. CFTC Q&A.
Month: April 2012
Volcker Rule Conformance Period Clarification
On April 19, the Fed, CFTC, FDIC, OCC and SEC issued a joint release clarifying that an entity covered by Section 619 of the Dodd-Frank Act, or the Volcker Rule, will have the full two-year period from the statutory effective date through July 21, 2014 in which to fully conform its activities and investments to the Volcker Rule requirements and any implementing rules adopted under the Volcker Rule, subject to the two-year period being extended by the Fed. Fed Release. Joint Release.
SEC and CFTC Rule Defining Swap-Related Terms
On April 18, pursuant to Title VII of the Dodd-Frank Act, the SEC and CFTC adopted joint rules to define certain terms related to the over-the-counter swaps market as part of the Securities Exchange Act of 1934 and the Commodity Exchange Act. The SEC rule will be effective 60 days after the date of publication in the Federal Register while the text of the CFTC rules will be published in conjunction with the adoption of final rules further defining “swap” and other terms later this year. SEC Release. CFTC Fact Sheet. CFTC Q&A.
Fannie and Freddie Streamline Short Sales
On April 17, the FHFA directed Fannie Mae and Freddie Mac to develop enhanced and aligned strategies to facilitate short sales, deeds-in-lieu and deeds-for-lease to help more homeowners avoid foreclosure, including requiring that servicers review and respond to short sale requests within 30 days from receipt of a short sale offer. The first stage of these developments will take effect in June. FHFA Release.
CPSS and IOSCO Final Report on Principles for Financial Market Infrastructures
On April 16, the Committee on Payment and Settlement Systems (CPSS) and IOSCO published the final report on the Principles for Financial Market Infrastructures, which updates the risk management and related standards applicable to financial market infrastructures. CPSS and IOSCO also released for comment the Disclosure Framework for Financial Market Infrastructures and the Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities. Comments must be submitted by June 15. SEC Release.
New York State Appeals Court Affirms Denial of BofA’s Motion to Sever and Consolidate Successor Liability Claims
On April 5, 2012, a five-judge panel for the New York’s First Department intermediate appellate court affirmed a lower court’s ruling that denied Bank of America’s motion to sever successor liability claims brought against it from the primary claims in four separate actions brought by four monoline insurers. Bank of America had requested that, once severed from the underlying lawsuits, the successor liability claims should be consolidated into a separate proceeding for discovery purposes. The four insurers, Ambac Assurance Corp, Financial Guaranty Insurance Co, MBIA Inc, and Syncora Guarantee Inc., claim in their respective lawsuits that Countrywide ignored underwriting guidelines, resulting in loans that were riskier than had been represented to the insurers and thus subjecting the insurers to billions of dollars in insurance claims when the loans defaulted. They seek to hold Bank of America liable under theories of successor liability related to Bank of America’s acquisition of Countrywide. In affirming the denial of Bank of America’s motion, the appeals court reasoned that the four actions were at different stages of discovery and that consolidation would result in undue delay. Order.
New York Attorney General Again Seeks to Intervene in $8.5 Billion Bank of America MBS Settlement
On April 10, 2012, New York Attorney General Eric Schneiderman filed an amended pleading in intervention in the Article 77 settlement approval proceeding concerning Countrywide RMBS that is currently pending New York state court. The Attorney General challenges the fairness and adequacy of Bank of America’s $8.5 billion proposed settlement addressing representation and warranty claims against Countrywide, claiming that the $8.5 billion settlement does not adequately cover investors’ losses, which are alleged to be $242 billion. The Attorney General also points out that only 22 investors directly participated in the settlement negotiations. The Attorney General’s earlier motion to intervene, filed last August, was determined to be moot when the case was removed to federal court. Pleading.
MSRB Request for Comment on Underwriter Submission Requirements
On April 10, the MSRB requested comment on proposed changes to rules that would allow underwriters of municipality securities to satisfy certain of their obligations to submit information about new issues with their data submission to the New Issue Information Dissemination Service, which is operated by the DTCC. Comments must be submitted by May 8. MSRB Release.
San Bernardino County Resolution Establishing Homeowner Protection Program via Eminent Domain
On April 10, the San Bernardino County Board of Supervisors adopted a resolution approving a Joint Exercise of Powers Agreement (JPA) between the County of San Bernardino, the City of Ontario, the City of Hesperia and the City of Fontana to establish a Homeowner Protection Program. Under the JPA, the parties will establish a joint powers authority to take actions to assist homeowners, including acquiring underwater residential mortgage loans by voluntary purchase or eminent domain and restructuring the mortgage loans to allow homeowners to continue to own and occupy their homes. Resolution and Supporting Materials.
SEC Request for Comment on JOBS Act Rules
On April 11, the SEC requested comments from the public as it prepares to propose certain rules as required by the Jumpstart Our Business Startups (JOBS) Act. SEC Release.