On March 15, the OCC published a notice of proposed information collection seeking comment on annual stress test reporting for covered institutions with consolidated assets of $10 billion to $50 billion. Comments are due by May 10. OCC Release.
Month: March 2013
Proposed Revisions to Interagency Q&As on Community Reinvestment
On March 18, the Fed, FDIC and OCC requested comment on proposed revisions to “Interagency Questions and Answers Regarding Community Reinvestment.” The Q&As provide guidance on the Community Reinvestment Act regulations. The proposed amendments would: (i) clarify how the agencies consider activities that benefit a statewide or regional area that includes an institution’s assessment area; (ii) provide guidance on investments in nationwide funds; (iii) clarify the consideration of certain community development services; (iv) address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose; and (v) clarify that community development lending should be evaluated so that it has a positive, neutral or negative effect on the large institution lending test rating. Comments are due within 60 days after publication in the Federal Register. Interagency Release.
FHFA Update on GSE Conservatorships
On March 19, Edward J. DeMarco, acting director of the FHFA, gave an update on the GSE conservatorships before the U.S. House Committee on Financial Services. Mr. Demarco discussed: (i) the goals of the FHFA as conservator; (ii) the FHFA’s approach to preparing for increased private market participation in housing finance; and (iii) the activities that the FHFA has undertaken during the past year to further its conservatorship goals. FHFA Update.
CFTC No-Action Relief from Required Clearing for Some Partial Swap Novations and Terminations
On March 20, the CFTC issued a no-action letter providing relief from required clearing for a limited set of “stub swaps” that remain after the partial novation or partial termination of an original swap that was not required to be cleared because it was executed prior to an applicable compliance date for required clearing. Some of the conditions to the relief are: (i) the original swap must not have been cleared; (ii) the original swap was executed prior to an applicable compliance date for required clearing; (iii) the partial novation or termination may reduce only the notional amount of the original swap, with all other terms of the stub swap remaining unchanged; and (iv) the records relating to the original swap are amended solely to reflect the reduced notional amount of the swap. CFTC Release.
Agencies Issue Updated Leveraged Lending Guidance
On March 21, the Fed, FDIC and OCC released updated supervisory guidance on leveraged lending which covers transactions characterized by a borrower with a degree of financial leverage that significantly exceeds industry norms. The guidance applies to financial institutions supervised by the agencies that engage in leveraged lending activities and focuses on: (i) establishing a sound risk-management framework; (ii) underwriting standards; (iii) valuation standards; (iv) pipeline management; (v) reporting and analytics; (vi) risk rating leveraged loans; (vii) participants; and (viii) stress testing. Joint Release.
Solar Power Finance & Investments Summit 2013
March 18-21, 2013 — The major gathering place for the solar power industry’s decision makers, the summit attracts key dealmakers in the solar development and financial communities to network and conduct business in San Diego, CA. Orrick is a Platinum Level Sponsor. On March 18, Howard Altarescu, Chair of the Solar Securitization Workshops, will present a workshop on Structural & Legal Considerations in Solar Securitizations. Eric Stephens and Michael Meyers will also moderate panels. Click here to view the current agenda.
Former Futures Trader at JP Morgan Cazenove is Sentenced to 4 Years Imprisonment for Insider Dealing
Following a prosecution brought by the FSA, Richard Joseph was found guilty at Southwark Crown Court of six counts of conspiracy to deal as an insider. Joseph received inside information from a print room manager at JP Morgan Cazenove and used it to place spread bets. He made a profit of £591,117 from the deals.
In a press release the FSA stated that “This conviction once again underscores our determination to take the strongest possible action against anyone involved in insider dealing.”
The FSA is currently prosecuting six other individuals for insider dealing and has so far secured convictions for 22 others since the start of 2009.
EMSA Publishes Guidance on Recognition of Third Country Central Counterparties (TC-CCPs) under EMIR
On March 12, The European Securities and Markets Authority (ESMA) published a guidance on the recognition of TC-CCPs under EMIR (the Regulation on OTC derivatives, CCPs, and trade repositories).
The guidance note reviews ESMA’s recognition process and offers practical guidance for applicants. This includes communication with ESMA prior to an application, the timeframe for submission of an application, the format and content of the application itself, and requests from ESMA for more information. ESMA’s decision on recognition is to be adopted within 180 working days of notification by ESMA that a TC-CCP’s application is considered to be complete, and it will take effect on the fifth working day after its adoption.
European Parliament Adopts at First Reading Proposed Regulations on European Venture Capital Funds and European Social Entrepreneurship Funds
On March 12, the European Parliament adopted at first reading texts relating to the proposed Regulations on European Venture Capital Funds (EuVECAs) and European Social Entrepreneurship Funds (EuSEFs).
The Regulations are expected to make it easier for venture capitalists to attract more capital for start-up companies across Europe, by establishing a single rule book of requirements which will ensure that venture capitalists are no longer required to meet different standards in each member state. The Regulations will also lay foundations for “European Social Entrepreneurship Funds” (ESEFs) which will allow investors to easily identify funds that are focused on investing in European social businesses.
The European Commission published a press release welcoming the adoption of the texts, stating that the Council is expected to adopt the Regulations on March 21, and that the Regulations will enter into force 20 days after publication in the Official Journal of the EU (OJ), which the Commission expects to be “before the summer”.
Massachusetts Regulator Fines Deutsche Bank Securities for CDO Conflict of Interest
On March 13, the Massachusetts Securities Division (Division) and Deutsche Bank Securities Inc. (DBSI) entered into a Consent Order following an investigation into the issuance of collateralized debt obligations. DBSI consented to the Division’s characterization of the facts underlying the matter, and did not admit or deny the Division’s legal findings. According to the stipulated facts, DBSI helped design, build, and market a CDO (Carina CDO Ltd.) in 2006 while simultaneously buying protection against losses on similar CDOs. The Division found that DBSI violated Section 204(a)(2)(G) and (J) of the Massachusetts Uniform Securities Act by failing to disclose its conflict of interests in structuring and selling the Carina CDO while purchasing CDS protection referencing other CDOs with similar expected performance. DBSI agreed to cease and desist any violations of Massachusetts securities law, accept formal censure by the Division, and pay a $17.5 million civil penalty. Consent Order.