Orrick's Financial Industry Week in Review - February 3, 2014

Financial Industry Developments

CFPB Report on Mortgage Servicing

On January 30, the CFPB issued a report highlighting mortgage servicing problems in 2013, including various violations of the Dodd-Frank Act's ban on unfair, abusive and deceptive acts. CFPB Release. CFPB Report.

Rating Agency Developments

On January 30, Fitch released its criteria for rating structured finance servicers of various products, including RMBS, CMBS and ABSFitch Report.

On January 30, Fitch released its criteria for rating operational risk of U.S. servicers of RMBS and small balance commercial securities (SBC). Fitch Report. 

On January 30, Moody's released its methodology for rating securitizations backed by loans granted to small- and medium-sized enterprises (SMEs). Moody's Report. 

On January 30, DBRS released its methodology for rating European covered bonds. DBRS Report

On January 29, Fitch released its criteria for rating U.S. private student loan ABS. Fitch Report.

On January 29, DBRS released its criteria setting forth the financial ratios and accounting treatments used to analyze non-financial companies. DBRS Report.

On January 28, Fitch released its criteria for rating non-performing loan (NPL) securitizations. Fitch Report

On January 27, Fitch released its criteria for rating variable-rate demand obligations (VRDOs) and commercial paper (CP) issued with external liquidity support. Fitch Report

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

RMBS and Other Securities Litigation

NCUA Can Bring RMBS Claims Against Goldman Sachs in Federal Court

On January 28, Judge Denise Cote of the U.S. District Court for the Southern District of New York denied Goldman Sachs’s motion to compel arbitration for RMBS claims brought by the National Credit Union Administration (NCUA). NCUA brought the claims as the liquidating agent of the Southwest Corporate Federal Credit Union. Goldman sought to compel arbitration under an agreement between Southwest and Goldman Sachs from 1992. The court held that NCUA has the power to repudiate contracts of a credit union in liquidation under the terms of its enabling legislation, and exercised that authority here. NCUA’s claims under Sections 11 and 12 of the Securities Act of 1933 and under the Texas Securities Act will proceed in federal district court. Order.

European Financial Industry Developments

Former BGC Senior Executive Banned by FCA Due to Concerns Over His Fitness and Propriety

On January 29, the FCA published a final notice regarding Anthony Verrier, a former inter-dealer broker at BGC Brokers LP.

The FCA has adjudged Mr. Verrier not to be a fit and proper person due to concerns it had over his integrity. These concerns came about as a result of the evidence Mr. Verrier gave in a UK High Court case.

The case, Tullett Prebon plc v BGC Brokers LP (and 13 others, including Verrier), concerned Mr. Verrier's participation in an unlawful means conspiracy, including his inducement of certain Tullett brokers to breach their employment contracts with Tullett by leaving early to join BCG without lawful justification.

The FCA has prohibited Mr. Verrier from performing any function relating to any regulated activity carried on by any authorized or exempt person or exempt professional firm. Final Notice. Tullett Prebon plc v BGC Brokers LP.

As Part of EU-US Trade Deal the European Commission Proposes Framework for Regulatory Cooperation in Financial Services

On January 27, the European Commission published a report setting out a proposal for a framework for regulatory cooperation in financial services in the context of negotiations for an EU-US trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP).

The EU intends to establish, within the TTIP framework, a process by which the EU and the United States are committed to working together towards strengthening financial stability. This cooperation would be based on a number of principles, backed by specific arrangements for the governance of the EU-US regulatory cooperation, guidelines on equivalence assessments and commitments to exchange necessary and appropriate data between regulators. Report.

Protocol on the Operation of the ESMA MiFID Database

On January 29, the European Securities and Markets Authority (ESMA) updated its protocol on the operation of its MiFID database (ESMA/2013/68b).

The protocol relates to practical arrangements for the cooperation of the national competent authorities (NCAs) of the member states and the staff of ESMA. The purpose behind it is to ensure these bodies manage the calculation and publication of market transparency calculations required under Article 33 of the MiFID Implementing Regulation (Regulation 1287/2006) between them. Protocol.

 

Topics:  ESMA, EU, FCA, Financial Regulatory Reform, MiFID, NCUA, Rating Agencies, RMBS, TTIP

Published In: Business Torts Updates, General Business Updates, Finance & Banking Updates, International Trade Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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