Orrick's Financial Industry Week in Review - January 27, 2014


Rating Agency Developments

On January 23, Fitch released its criteria for analyzing interest rate stresses in structured finance transactions and covered bondsFitch Report

On January 22, DBRS released its methodology for rating wind power projectsDBRS Report

On January 22, DBRS released its methodology for rating solar power projectsDBRS Report

On January 22, S&P released its methodology for rating Japanese CMBSS&P Report

On January 22, Fitch released an exposure draft seeking comments for sovereign risk impact on rating structured finance and covered bondsFitch Report.

On January 21, DBRS released its request for comment for rating supranational institutionsDBRS Report.

On January 21, DBRS released its cash flow assumptions for rating CLOs and CDOs backed by corporate debtDBRS Report

On January 21, DBRS released its methodology for rating CLOs and CDOs backed by large corporate debtDBRS Report.

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

Distressed Debt and Restructuring Developments

Lehman Court Finds Safe Harbors Protect Damage Calculation Provisions in Swap

Judge James M. Peck issued a significant opinion in the Lehman Brothers bankruptcy late last month, which preserved important safe harbored rights.  The opinion protects a non-debtor counterparty's right to rely on a contractually agreed methodology for calculating damages upon the liquidation of a safe harbored swap agreement—even if the debtor's bankruptcy triggers the provision.  To read the complete Orrick alert, please click here.

Asset Management

FTC Announces Revised Thresholds for Clayton Act Antitrust Reviews for 2014

On January 17, the Federal Trade Commission revised the thresholds that determine whether companies are required to notify federal antitrust authorities about a transaction under Section 7A of the Clayton Act, the Hart-Scott-Rodino (HSR) Antitrust Improvements Act.  The FTC is required to revise various thresholds set forth in the HSR Act annually, based on the change in gross national product.  For instance, for 2014, the size of transaction threshold for reporting proposed mergers and acquisitions subject to enforcement under Section 7A of the Clayton Act will increase from $70.9 million to $75.9 million. A full listing of current thresholds can be found on the FTC's website, which will be updated once the revised thresholds are published in the Federal Register.

The revised thresholds under Section 7A will apply to all transactions that close on or after the effective date of the notice, which is 30 days after its publication in the Federal Register.  Full Listing of Current Thresholds.

RMBS and Other Securities Litigation

Judge Dismisses Federal Securities Claims from NCUA Action Against Morgan Stanley

On January 22, Judge Denise Cote of the U.S. District Court for the Southern District of New York trimmed claims from a lawsuit brought by the National Credit Union Administration Board, as liquidating agent for various federal credit unions, alleging that two Morgan Stanley entities made material misrepresentations in the offering documents for $400 million in RMBS.  Partially granting Morgan Stanley's motion to dismiss, the court held that NCUA's federal securities claims were time-barred under the three-year statute of repose imposed by the Securities Act of 1933.  In reaching this conclusion, the court found that NCUA did not become conservator for the credit unions until after the statute of repose had run, and therefore could not avail itself of a provision of the Federal Credit Union Act that extends the limitations period for actions brought by the NCUA.  Despite its dismissal of NCUA's federal securities claims, the court ruled that securities claims against Morgan Stanley brought under Illinois and Texas blue sky laws both were timely and adequately pled.  Decision.

European Financial Industry Developments

CSD Regulation for Considering Securities Settlement in the EU to be Considered by European Parliament in April 2014       

On January 23, the European Parliament's procedure file on the proposed CSD Regulation for considering securities settlement in the EU was updated to indicate that it will now be discussed at the April 2-3, 2014 plenary session. 

This update postpones the original timetable, as the Parliament had initially indicated that the CSD Regulation would be considered at the March 2014 plenary session.  Procedure File

PRA Issues Consultation Paper on PRA Rulebook

On January 21, the PRA issued a consultation paper on the proposed redrafting of certain areas of the PRA Rulebook, including the Supervision Manual, the Financial Stability and Market Confidence Sourcebook and the Principles for Business.

The new PRA Rulebook will eventually replace the current PRA Handbook, and the consultation paper sets out the approach to existing parts of the PRA Handbook and their potential destinations in the new rules. In particular, the consultation states that statements of policy required under FSMA will be published as separate documents. The PRA also intends to update its website with guidance on process issues currently contained in the PRA Handbook.

Responses to the consultation must be sent by March 14, 2013, with the final version of the new rules due later in the year.  Consultation Paper

EPC Publishes the Final Version of the White Paper on Mobile Wallet Payments

On January 21, the European Payments Council (EPC) published the final version of its white paper on mobile wallet payments. It focuses on the use of mobile wallets as an enabler for mobile payments in the Single Euro Payments Area (SEPA).  White Paper.


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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