CFTC Issues Time-Limited No-Action Letter Relating to Certain CDS Clearing-Related Swaps Executed Pursuant to a CDS Settlement Price Process
On December 31, CFTC issued a no-action letter providing time-limited relief relating to certain occasional, off-facility, cleared credit default swaps (CDSs) that are entered into pursuant to a DCO's rules related to its price submission process for determining end-of-day settlement prices for cleared CDSs. Release. Letter.
Agencies are Reviewing Treatment of CDOs Backed by Trust Preferred Securities Under the Volcker Rule
On December 27, the Fed, FDIC, OCC and the SEC stated that they are in the process of reviewing whether it would be appropriate to subject collateralized debt obligations backed by trust preferred securities to the Volcker rule. The agencies intend to address the matter no later than January 15, 2014. Statement.
SEC Removes References to NRSRO Ratings
On December 27, the SEC adopted amendments to eliminate references in certain of its rules and forms to credit ratings. The changes were mandated by Dodd-Frank. Rating references were removed from the following rules and forms:
Rule 5b-3 under the Investment Company Act;
Forms N-1A, N-2, and N-3;
Rule 15c3-1 (and certain appendices) under the Securities Exchange Act of 1934;
Rule 15c3-3 under the Securities Exchange Act of 1934; and
Rule 10b-10 under the Securities Exchange Act of 1934.
Release. Final Rules #1. Final Rules #2.
FDIC and CFPB Settle with American Express Centurion Bank Charges of Unfair and Deceptive Practices
On December 24, the FDIC and CFPB announced a settlement with American Express Centurion Bank concerning charges of unfair and deceptive marketing practices related to credit card "add-on products" in violation of Section 5 of the Federal Trade Commission (FTC) Act. Together, the FDIC and CFPB will require restitution of no less than $40.9 million. The OCC and CFPB also announced actions against other American Express affiliated institutions for the same unfair and deceptive practices. Release. Order.
The Fed Issues Final Rule on Treatment of Uninsured U.S. Branches and Agencies of Foreign Banks Under Section 716 of Dodd-Frank
On December 24, the Fed issued the final rule clarifying the treatment of uninsured U.S. branches and agencies of foreign banks under Section 716 of the Dodd-Frank Act. The final rule adopts the interim final rule issued on June 5, 2013. Section 716 prohibits the provision of certain types of federal assistance to swaps entities. Insured depository institutions that are swaps entities are eligible for a transition period of up to 24 months to comply and for certain statutory exceptions. The final rule clarifies that, for purposes of section 716, uninsured U.S. branches and agencies of foreign banks are treated as insured depository institutions. Release. Final Rule.
CFTC Issues No-Action Letter Regarding Introducing Brokers' Compliance with Certain Financial Reporting
On December 23, CFTC issued a no-action letter that provides relief for certain Introducing Brokers (IBs) from certain financial reporting and capital computation requirements. Part of the no-action relief is time-limited to newly registered IBs for the fiscal years ending on or before December 31, 2013. Release. Letter.
CFTC Issues Advisory Concerning Commodity Trading Advisors and Swaps
On December 23, CFTC provided guidance regarding requirements imposed on commodity trading advisors (CTAs) resulting from Dodd-Frank on the potential new advisory obligations of CTAs. Release.
Fed Advised Large Financial Institutions on Risk Evaluation
On December 20, the Fed advised large financial institutions to ensure that if risks are shifted to a thinly capitalized counterparty, any residual risk is effectively captured in the firm's internal capital adequacy assessment. Release. Letter.
Three Agencies Release Annual CRA Asset-Size Threshold Adjustments for Small and Intermediate Small Institutions
On December 19, the Fed, FDIC and OCC announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank and intermediate small savings association under the Community Reinvestment Act. Release.
Three Agencies Issue FAQ Regarding CDOs Backed by Trust Preferred Securities Under the Volcker Rule
On December 19, Fed, FDIC and OCC issued Frequently Asked Questions to clarify rules applicable to investments in covered funds and whether collateralized debt obligations backed by trust preferred securities (TruPS CDOs) could be determined to be covered funds under the Volcker Rule. The FAQs clarify that banking entities that have holdings in TruPS CDOs may use the conformance period to determine if they can be brought into conformance by July 21, 2015. Release. FAQ.
Three Agencies Seek Comment on Joint Supplemental Guidance on Income Tax Allocation Agreements
On December 19, Fed, FDIC and OCC issued a statement seeking comment on supplemental guidance on income tax allocation agreements involving holding companies and insured depository institutions. The proposed guidance will clarify ownership of any tax refunds. Release. Proposed Addendum.
FHFA Releases 2013 Performance and Accountability Report
On December 16, the FHFA released the 2013 Performance and Accountability Report (PAR), discussing the FHFA's progress as regulator and conservator of Fannie Mae and Freddie Mac and regulator of the 12 Federal Home Loan Banks (FHLBs). Release. Report.
SEC Issues Proposed Rule on Amendments to Regulation A
On December 18, the SEC proposed rule amendments to Regulation A implementing Section 401 of the JOBS Act directing the SEC to exempt annual offerings of up to $50 million from registration. The comment period will close 60 days after publication in the Federal Register. Proposed Rule.
CFPB, State Authorities Settle with Ocwen
On December 19, CFPB and 49 states and the District of Columbia filed a proposed court order requiring Ocwen Financial Corporation, the fourth-largest mortgage servicer in the country, to provide $2 billion in principal reduction to underwater borrowers. Ocwen was previously charged with engaging in illegal and deceitful foreclosure practices and other violations. Press Release. Consent Order.
IRS Issues Final Regulations and New Proposed Regulations Regarding Withholding on Derivatives on U.S. Stocks
On December 5, the Internal Revenue Service issued the final regulations and the 2013 proposed regulations under section 871(m), which address withholding on certain equity-linked notional principal contracts (NPCs) and other financial instruments. These regulations are targeted at derivatives referencing U.S. stocks in which non-U.S. persons receive a "dividend equivalent" while arguably avoiding U.S. withholding tax but will impact many common corporate transactions, including merger and acquisition transactions and equity based compensation arrangements. For more information and to read the complete Orrick alert, please click here. Final Regulations. Proposed Regulations.