On May 1, DBRS released its methodology for Canadian Public Pension Funds and Related Exclusive Asset Managers. Methodology.
On April 30, DBRS released a Dutch addendum to its European RMBS Insight Methodology. Release.
On April 26, Fitch released updated methodology for the surveillance analysis of existing U.S. trust preferred CDOs. Release.
On August 2, 2016, Moody’s issued a report entitled: Moody’s Approach to Rating Securitisations Backed by Non-Performing and Re-Performing Loans. Report.
On August 1, 2016, S&P issued a report entitled: General: Global Methodology for Rating Retranchings of ABS, CMBS, and RMBS. Report.
On July 29, 2016, DBRS issued a report entitled: Global Methodology for Rating Banks and Banking Organisations. Report.
On July 28, 2016, Fitch issued a report entitled: Fitch Updates Global Rating Criteria for CLOs and Corporate CDOs. Report.
On July 28, 2016, Fitch issued a report entitled: Fitch: No Rating Changes from Update to Global LMI Criteria in RMBS. Report.
On February 9, DBRS published its methodology for rating Canadian government STRIP bonds. Report.
On February 9, DBRS published its methodology for guarantees and other forms of support. Report.
On February 9, DBRS published its methodology for rating CLOs and CDOs of large corporate credit. Report.
On February 9, DBRS published its methodology outlining cash flow assumptions DBRS applies to rating corporate credit securitizations. Report.
On November 3, 2015, Goldman Sachs Group Inc. agreed to settle a lawsuit brought by a class of investors over Goldman’s sale of two collateralized debt obligations. The settlement agreement comes on the heels of a September 8, 2015 summary judgment decision for Goldman that we recently covered, which found that Plaintiffs had failed to show evidence that Goldman Sachs knew about the risks associated with the CDOs. The settlement amount was not disclosed. Settlement Announcement.
On September 23, Justice Marcy S. Friedman of the New York Supreme Court for New York County denied CIFG’s motion to amend its complaint against J.P. Morgan in a case the Court previously dismissed in June. CIFG had originally brought suit claiming two causes of action against J.P. Morgan: 1) that J.P. Morgan had made material misrepresentations to induce CIFG to issue insurance on credit default swaps guaranteeing two collateralized debt obligations, and 2) for common-law fraud. In its June dismissal order, the Court dismissed the first cause of action but allowed CIFG to attempt to replead its fraud claim. CIFG’s proposed amended complaint included two causes of action, the first of which the Court held was identical in all material respects to the previously dismissed first cause of action. As to the proposed second cause of action for common law fraud, the Court noted that while CIFG had added additional allegations to attempt plead the action with particularly, it had failed to address whether a common law fraud claim could be maintained based on alleged misrepresentations made by non-insured Bear Stearns about the collateral underlying the CDOs. The Court granted CIFG leave to amend to attempt to cure this issue. Order.
On February 2, Standard & Poor’s Ratings Services settled claims brought by the Department of Justice, 19 states and the District of Columbia related to credit ratings it issued and maintained for RMBS and CDOs before the financial crisis. As part of the settlement, it agreed to pay a total of $1.375 billion, with $687.5 million paid to the Department of Justice and $687.5 million to the states and District of Columbia. Settlement Agreement.
Also on February 2, S&P settled similar claims brought by the California Public Employees’ Retirement System (CalPERS). The terms of that settlement agreement have not been made public.
On January 23, Fitch released its criteria for analyzing interest rate stresses in structured finance transactions and covered bonds. Fitch Report.
On January 22, DBRS released its methodology for rating wind power projects. DBRS Report.
On January 22, DBRS released its methodology for rating solar power projects. DBRS Report.
On January 22, S&P released its methodology for rating Japanese CMBS. S&P Report.
On January 22, Fitch released an exposure draft seeking comments for sovereign risk impact on rating structured finance and covered bonds. Fitch Report.
On January 21, DBRS released its request for comment for rating supranational institutions. DBRS Report.
On January 21, DBRS released its cash flow assumptions for rating CLOs and CDOs backed by corporate debt. DBRS Report.
On January 21, DBRS released its methodology for rating CLOs and CDOs backed by large corporate debt. DBRS Report.
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On November 21, the Court of Appeals for the Second Circuit affirmed the dismissal of a suit brought by South Korea‘s Woori Bank against Merrill Lynch & Co., Inc. and Bank of America Corp. on statute of limitations grounds. The bank brought claims for fraud, rescission, negligent misrepresentation and unjust enrichment on May 18, 2012 stemming from its $143 million investment in several collateralized debt obligations. The Second Circuit agreed with the lower court that publicity about Merrill Lynch’s CDOs, related lawsuits and government investigations sufficiently alerted Woori to any claims prior to May 2009. The bank’s claims were therefore time-barred under South Korea’s applicable three year statute of limitations. Decision.
On November 20, S&P released a request for comment on its methodology for rating CDOs of project finance debt. Comments must be submitted by December 21. S&P Request for Comment.
On November 19, Moody’s released its updated approach to rating CLOs. Moody’s Report.
On November 19, Moody’s released its approach to rating corporate synthetic CDOs. Moody’s Report.
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On November 12, the liquidators for two Bear Stearns overseas hedge funds filed their complaint against McGraw Hill, Standard & Poor’s, Moody’s, and Fitch (collectively the rating agencies) in an action in New York Supreme Court alleging that fraudulent ratings led to over $1 billion in losses for the funds’ investors. According to the complaint, the funds invested in a portfolio of high-grade structured finance products, including CDOs and RMBS, where “at least 90% had the highest rating available,” and therefore depended heavily on ratings in making investment decisions. The complaint alleges that the rating agencies knew that the ratings assigned to the securities in which the funds invested were false. Plaintiffs claim that the rating agencies lacked independence from the issuers of the securities and that their ratings were tainted by a desire to maintain market share in a profitable industry. The funds also allege that the rating agencies used relaxed standards in their initial ratings and subsequently failed to conduct proper ongoing surveillance of rated securities, leading to delays in downgrading ratings for allegedly faulty securities. The liquidators initially commenced the action in July through New York’s summons with notice procedure. Complaint.
