Financial Industry Developments

SEC Enforcement Division Modifies Municipalities Disclosure Initiative

On July 31, the SEC announced modifications to its Municipalities Continuing Disclosure Cooperation (MCDC) Initiative that will (i) allow issuers and obligors more time to complete their reporting requirements by extending the deadline to self-report potential violations from September 10, 2014 - December 1, 2014 and (ii) implement a tiered approach to civil penalties for underwriters based on the size of the firm.   Release     ?

Treasury Issues Proposed Rules to Enhance Financial Transparency

On July 30, the Financial Crimes Enforcement Network of the U.S Department of the Treasury proposed rules under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements for banks and other financial institutions (including brokers or dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities) in an effort to help prevent the use of anonymous companies to engage in or launder the proceeds of illegal activity in the U.S. financial sector.  Comments must be submitted within 60 days of the proposal's publication in the Federal Register.  ReleaseNotice of Proposed Rulemaking.  

Rating Agency Developments

On July 31, Moody's released its rating methodology for global manufacturing companiesReport.

On July 25, Fitch released its global rating criteria for Corporate CDOsReport.

On July 25, DBRS issued its methodology for rating companies in the industrial products industryReport.

On July 25, DBRS issued its methodology for rating companies in the printing industryReport.

On July 25, DBRS issued its methodology for rating companies in the railway industryReport.

On July 25, DBRS issued its methodology for rating companies in the capital goods dealership industryReport.

On July 25, DBRS issued its methodology for rating companies in the airline industryReport.

 Note: Free registration is required for rating agency releases and reports.
RMBS and Other Securities Litigation

FHFA Wins Summary Judgment That It Did Not Have Actual Knowledge of RMBS Misrepresentations

On July 30, Judge Denise Cote of the United States District Court for the Southern District of New York granted the motion for partial summary judgment brought by FHFA, as conservator for Fannie Mae and Freddie Mac.  FHFA initiated securities fraud cases against a number of banks alleging false statements made in the offering documents for RMBS purchased by the GSEs between 2005 and 2007.  FHFA's action remains pending against HSBC, Goldman Sachs, RBS Securities and others.  In its motion for summary judgment, FHFA sought a ruling that no reasonable jury could find that the GSEs knew the banks' statements were false.  The defendants argued seven categories of circumstantial evidence illustrated the GSEs' awareness of the information that they now allege was concealed.  These included the GSEs' knowledge about loan originators, participation in the subprime and Alt-A markets, knowledge of risk associated with reduced documentation programs, and anti-predatory lending reviews.  The court held that these categories were not enough to prove that the GSEs had actual knowledge that any representation was false, as required by Sections 11 and 12(a)(2) and the Blue Sky Laws.  The court therefore granted summary judgment for FHFA on that issue.  Decision.

European Financial Industry Developments

PRA Issues Policy Statement on Bonus Clawback

On July 30, the Prudential Regulation Authority (PRA) issued a policy statement in respect of responses received to its consultation on proposals to extend the Remuneration Code to require all PRA-authorized firms to ensure that vested bonus awards can be clawed back from individuals where necessary.  Appendix 1 of the policy statement contains the final rules on bonus clawback, which will enter into force on January 1, 2015.  Policy Statement.   

Council of EU Publishes Revised Text of UCITS-V

The Council of the EU has published a revised text (dated July 23, 2014) of the UCITS V Directive (PE-CONS 75/1/14).  Revised Text.   

Bank of England Publishes Statement on Enforcement Action Against Lloyds Bank PLC and Bank of Scotland PLC

On July 28, the Bank of England published a statement on Financial Conduct Authority enforcement action against Lloyds Bank PLC and Bank of Scotland PLC.  The statement notes that Lloyds Banking Group has paid the Bank of England £7.76 million as compensation for a reduction in fees received by the Bank of England as a result of the manipulation of submissions to the BBA GBP Repo Rate by Lloyds Bank PLC and Bank of Scotland PLC.  Statement.  

 

Topics:  Airlines, Bank of England, Bank Secrecy Act, Collateralized Debt Obligations, Enforcement, Enforcement Actions, EU, Fannie Mae, FHFA, Financial Conduct Authority, Fitch, Freddie Mac, Lloyds Banking Group, Manufacturers, MCDC, Moody's, Railroads, Rating Agencies, RMBS, Royal Bank of Scotland, SEC, Securities Fraud, U.S. Treasury, UCITS

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