On April 8, U.S. District Judge Mariana R. Pfaelzer of the Central District of California dismissed the FDIC’s suit against Countrywide. FDIC, as the receiver for Colonial Bank, filed suit against Countrywide and Bank of America as its successor for violations of the 1933 Securities Act. FDIC alleged Countrywide made false statements in offering documents in connection with the issuance of residential mortgage-backed securities in violation of Sections 11 and 15 of the Act. Judge Pfaelzer held that each claim was barred by the statute of limitations of one year from when the plaintiff discovered, or a reasonably diligently investor would have discovered, the alleged misstatement. Judge Pfalezer held that a reasonably diligent plaintiff would have had adequate information to make such a discovery before August 14, 2008, and consequently the bank’s claims had expired by the time the FDIC was appointed receiver, one year later. Decision.
Month: April 2013
New York State Court Dismisses RMBS Fraud Suit Against UBS
On April 5, New York Supreme Court Justice Shirley Werner Kornreich dismissed with prejudice a suit brought by six Loreley Financing entities against various UBS entities. Loreley alleged fraud stemming from UBS’s issuance of $331 million of CDOs, in which Loreley was an investor, that were comprised of RMBS and credit default swaps. Loreley brought claims for common law fraud, conspiracy to defraud, aiding and abetting fraud, rescission, fraudulent conveyance and unjust enrichment. Justice Kornreich held the allegations in the Complaint failed to show how UBS caused the CDOs to fail and therefore failed to state a claim, including for fraud. Decision.
Second Circuit Affirms Denial of UBS’s Motion to Dismiss FHFA Complaint
On April 5, the United States Court of Appeals for the Second Circuit affirmed the decision of the district court denying UBS’s motion to dismiss the complaint brought by the FHFA. FHFA sued UBS as conservator of Fannie Mae and Freddie Mac, alleging fraud and misrepresentation in connection with the sale of $6.4 billion in RMBS. The court held that the action was timely because it commenced within three years after FHFA was appointed conservator of Freddie Mac and Fannie Mae. The court also held that FHFA had standing to bring the action, rejecting UBS’s argument that the appointments of the FHFA’s Acting Directors were unconstitutional because the Directors had not been confirmed by the Senate. Decision.
Did an Obscure Remark in a Recent Regulatory Publication Signal a New Interpretation of the Anti-Tying Rules?
In 2003, the Federal Reserve released its proposed interpretation of the anti-tying provisions of the Bank Holding Company Act Amendments, in which it stated that market power and anti-competitive effects were not necessary elements of an illegal tying arrangement. Despite substantial commentary on the Federal Reserve’s proposed interpretation from financial institutions and other regulators, including the Department of Justice, the Federal Reserve has not revised its proposed interpretation of the anti-tying provisions of the BHC Act. This alert discusses a recent regulatory publication raising the possibility that the Federal Reserve may be revisiting its earlier stance. For more information, please click here.
Multi-Agency Guidance on Leveraged Lending Practices
On March 21, 2013, federal bank regulators released final interagency guidance on leveraged lending. This alert provides an overview of the guidance and highlights certain differences between the final version of the guidance and the draft version that was proposed in 2012. For more information, please click here.
The Extra-Territorial Reach of the Broker-Dealer Registration Requirements Under the U.S. Securities Exchange Act of 1934
This alert provides an overview of the Staff of the Securities and Exchange Commission’s address of frequently asked questions regarding Rule 15a-6 and foreign broker-dealers. For more information, please click here.
Rating Agency Developments
On April 12, Fitch released its criteria for rating aircraft operating lease ABS. Fitch Report.
On April 12, Moody’s released its public finance housing methodology and research handbook. Moody’s Report.
On April 10, Fitch released its global structured finance and covered bonds rating criteria hierarchy. Fitch Report.
On April 10, Fitch released its criteria for rating U.S. auto loan ABS. Fitch Report.
On April 9, DBRS released its methodology for rating European structured finance transactions. DBRS Report.
On April 9, Fitch released its global infrastructure and project finance rating criteria hierarchy. Fitch Report.
Note: Free registration is required for rating agency releases and reports.
CFPB Small Entity QM Compliance Guide
On April 10 , the CFPB published a small entity compliance guide for the Ability-to-Repay and Qualified Mortgage rule, as well as a comparison chart which compares the general Ability-to-Repay requirements with the requirements for originating Qualified Mortgage loans. CFPB Compliance Guide. CFPB Comparison Chart.
CFPB Proposed Clarification of Escrow Rule
On April 12, the CFPB issued a proposed rule clarifying and making technical amendments to the 2013 Escrows Final Rule issued in January relating to mandatory escrow requirements for certain mortgage loans. Comments on the proposed rule must be received within 15 days of publication in the Federal Register. CFPB Proposed Rule.
FHFA HARP Extension
On April 11, the FHFA announced that Fannie Mae and Freddie Mac will extend the Home Affordable Refinance Program (HARP) by two years until December 31, 2015. The program was set to expire on December 31 of this year. FHFA Release.