U.S. Financial Industry Developments

CFTC Proposes Rules to Simplify Process for Foreign Clearing Organizations to Obtain DCO Registration Exemption

On August 8, 2018, the Commodity Futures Trading Commission (CFTC) approved a proposal to codify policies and procedures for clearing organizations located outside of the U.S. to obtain an exemption from registration as a derivatives clearing organization. Comments on this proposal will be accepted for 60 days after publication in the Federal Register. Press Release. Proposed Rule.

Ninth Circuit Withdraws Controversial Altera Opinion and Will Allow New Judge to Make Ultimate Determination

On August 7, 2018, the Ninth Circuit withdrew its July 24 decision in Altera so that new panel member, Judge Susan P. Graber, can now consider the case. The Ninth Circuit's Altera decision is discussed in our Tax Law Update here. In the aftermath of the death of Judge Reinhardt, who had concurred in the original majority opinion, Judge Graber was appointed to the panel on August 2 under a special procedure that permits the replacement of recently deceased judges involved in an active proceeding. Because the ultimate resolution of the case means billions of dollars to many technology companies, the eyes of Silicon Valley will be on the newly constituted panel over the next few months as Altera is revisited. Click here to read the full Orrick-authored alert.

Rating Agency Developments

On August 8, 2018, Fitch published a report entitled Global Rental Fleet ABS Rating Criteria. Report.

On August 8, 2018, KBRA published a report entitled Global Structured Finance Counterparty Methodology. Report.

On August 7, 2018, KBRA published a report entitled Global Structured Credit Rating Methodology. Report.

On August 3, 2018, DBRS published a report entitled Master European Residential Mortgage-Backed Securities Rating Methodology and Jurisdictional Addenda. Report.

On August 3, 2018, Fitch published a report entitled EMEA RMBS Rating Criteria. Report.

On August 3, 2018, KBRA published a report entitled CMBS Single Borrower & Large Loan Rating Methodology. Report.

On August 3, 2018, KBRA published a report entitled CMBS Property Evaluation Methodology. Report.

On August 3, 2018, Moody's published a report entitled Software Industry. Report.

On August 3, 2018, Moody's published a report entitled Securities Issued by US Closed-End Funds. Report.

On August 3, 2018, Moody's published a report entitled US Housing Finance Agency Issuer Rating Methodology. Report.

On August 3, 2018, Moody's published a report entitled Diversified Technology. Report.

RMBS and Other Securities Litigation

SDNY Magistrate Judge Recommends Denying BlackRock's Motion for Class Certification and Dismissing Claims for 39 RMBS Trusts

On August 7, 2018, Magistrate Judge Sarah Netburn of the United States District Court for the Southern District of New York issued a Report and Recommendation recommending that District Court Judge Jesse Furman deny Plaintiffs' motion for class certification in BlackRock Balanced Capital Portfolio (FI), et. al. v. Deutche Bank National Trust Company, et al. The recommendation was made in connection with the certificate holder Plaintiffs' claims against the Trustee related to numerous RMBS Trusts securitized between 2004 and 2007. Magistrate Judge Netburn determined that the BlackRock Plaintiffs were an atypical class and that individual issues related to class membership, affirmative defenses, damages and the obligations imposed by the respective governing agreements predominated over common liability issues in the litigation. Magistrate Judge Netburn also recommended dismissing Plaintiffs' claims under the Trustee Indenture Act for 39 Trusts on standing grounds because Plaintiffs—who purchased the certificates at issue in the secondary market years after issuance—could not demonstrate that they had suffered any harm at the time they filed the lawsuit. She also recommended not exercising supplemental jurisdiction over the remaining state law claims for those 39 Trusts, finding that state court is an appropriate forum to handle novel issues of state law and that trial was far enough away to alleviate any concerns regarding judicial economy.

HSBC to Pay $765 Million in Connection With DOJ RMBS Claims

On August 6, 2018, HSBC announced that it had reached a $765 million settlement-in-principle with the United States Department of Justice regarding its origination and securitization of RMBS between 2005 and 2007. While not yet finalized, the settlement would end a nearly 8-year investigation.