Month: June 2012

Rating Agency Developments

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On June 15, Fitch revised its country-specific treatment of recovery ratings. Fitch Report.

On June 13, Fitch updated its criteria for U.S. timeshare loan ABS. Fitch Report.

On June 12, Fitch updated its criteria for revenue-supported obligations in the public finance sector. Fitch Report.

On June 12, Fitch updated its criteria for rating foreign banking subsidiaries higher than the parent bank. Fitch Report.

On June 12, DBRS released its criteria for Canadian ABCP supported by full wrap liquidity. DBRS Report.

Note: Free registration is required for rating agency releases and reports

SEC Proposed Sequencing of Derivatives Regulation

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On June 11, the SEC issued a policy statement and request for comment on the anticipated sequencing of compliance dates of final rules to be adopted by the SEC pursuant to certain provisions of Title VII of the Dodd-Frank Act, regarding the regulation of security-based swaps and security-based swap market participants under the Exchange Act. Comments must be submitted on or before 60 days from publication in the Federal Register. SEC Release.  Policy Statement with Request for Comment.

HUD Expansion of Sale of Troubled Mortgages

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On June 8, HUD announced the establishment of the Distressed Asset Stabilization Program, an expansion of an FHA pilot program allowing private investors to purchase pools of mortgages headed for foreclosure, and charging investors with helping to bring the loans out of default. Servicers can place a mortgage loan into a pool if (i) the borrower is at least 6 months’ delinquent on its mortgage; (ii) the servicer has exhausted all steps in the FHA loss mitigation process; (iii) the servicer has initiated foreclosure proceedings; and (iv) the borrower is not in bankruptcy. Sales are scheduled to begin in September. HUD Release.

OCC, Fed and FDIC Proposed Capital Rules

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On June 12, the OCC, Fed, and FDIC announced that they are seeking comment on three notices of proposed rulemaking (NPRs) that would revise and replace the agencies’ current capital rules. In the first Basel III NPR, the agencies propose to revise their risk-based and leverage capital requirements consistent with agreements reached by the Basel Committee on Banking Supervision. The second Basel III NPR would revise the agencies’ prompt corrective action framework by incorporating the new regulatory capital minimums and updating the definition of tangible common equity. In the third capital NPR, the agencies propose to revise and harmonize rules for calculating risk-weighted assets to enhance risk sensitivity and address weaknesses identified over recent years, including by incorporating aspects of the Basel II standardized framework, and alternatives to credit ratings, consistent with section 939A of the Dodd-Frank Act. Comments on the three NPRs are requested by September 7. The agencies also announced the finalization of the market risk capital rule that was proposed in 2011, which will be effective on January 1, 2013.  Joint Release.

PLI’s Internal Investigations 2012: How to Protect Your Clients or Companies in the Global, Post-Dodd Frank World

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Mike Delikat, chair of Orrick’s Employment Law practice, will be speaking at PLI’s Internal Investigation program on June 26 in New York. This program will discuss how to conduct an internal investigation, in-house or outside; considerations at the outset: nature and scope of the investigation; how to conduct the investigation: considerations, processes and procedures; the government’s use, evaluation and weighing of internal investigations; how to conclude the investigation: when and how to prepare a report, alternatives, corrective actions; and ethical issues and how to deal with them. For more information, please click here.

Global ABS 2012 Conference

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Orrick is an exhibitor sponsor of Global ABS 2012 Conference, which will be hosted by Information Management Network (IMN) at Square Brussels Meeting Center in Brussels, Belgium on June 12-14. More than 3,500 structured finance professionals are expected to attend. The agenda will include, among others, topics such as global regulatory changes that impact securitization; restoring confidence in the ABS markets; and CMBS, RMBS, and real estate and market fundamentals. For more information, please click here.

AD&Co’s 20th Annual Conference: Innovation Amid Uncertainty

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Andrew Davidson & Co. will be hosting their 20th Annual Conference – Innovation Amid Uncertainty, on June 13 in the Graduate Center of City University of New York. Partner Howard Altarescu will participate as a panelist in the session Securitization and Risk Sharing: Restoring the Role of Private Capital in the Housing Finance System. For more information about the event, and to register, please click here.

FSA Issues Final Notices to an Investment Banker and His Wife for Insider Dealing

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On 31 May 2012, the FSA issued Christian Littlewood and his wife, Angie, with final notices prohibiting them from performing any function in relation to any regulated activity. Between 1998 and 2008, Mr. Littlewood was employed by the investment bank Dresdner Kleinwort Wasserstein Ltd. As a result of his employment he had access to inside information relating to securities. Mr. and Mrs. Littlewood used the inside information obtained through his employment to facilitate the placing of trades in eight separate stocks just prior to announcements to the market. As a result of these trades, Mr. and Mrs. Littlewood, together with a third party friend of Mrs. Littlewood (Mr. Sa’aid), made profits of around £590,000.

The FSA’s action follows the conviction of Mr. and Mrs. Littlewood for criminal offences of insider dealing in February 2011. Final Notice for Christian Littlewood. Final Notice for Angie Littlewood.

European Parliament to Consider Solvency II Amending Directive at Plenary Session

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On 7 June 2012, the European Parliament updated its procedure file on the proposed Directive amending the transposition and application dates for the Solvency II Directive (2009/138/EC). The procedure file indicates that the Parliament will consider the proposed Directive during its plenary session on 3 July 2012. Procedure File.

The European Commission published its legislative proposal for this Directive in May 2012. Legislative Proposal.

ESMA Publishes Responses to Call for Evidence on Transaction Reporting

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The European Securities and Markets Authority (ESMA) has published the responses it has received to its May 2012 call for evidence on transaction reporting. On 7 May 2012, ESMA published a call for evidence on transaction reporting. The purpose of the call for evidence was to gather initial views on ESMA’s work to develop guidelines on harmonised transaction reporting under the Markets in Financial Instruments Directive (2004/39/EC) (MiFID). This followed the commitment made by ESMA’s predecessor, the Committee of European Securities Regulators (CESR), to review its May 2007 Level 3 guidelines on MiFID transaction reporting.

On the basis of responses received, ESMA intends to launch a full public consultation on guidelines on harmonised transaction reporting. Call for Evidence. Responses.