The Legacy of Lehman Series
Faced with huge losses in the subprime mortgage market, Lehman Brothers Holdings Inc. (the ultimate parent of the Lehman group) filed for Chapter 11 bankruptcy protection on September 15, 2008, a momentous event which preceded the collapse and break-up of that group, including the filing for administration of Lehman Brothers International (Europe), the main operating subsidiary for the UK and Europe.
Looking back from the perspective of the sixth anniversary of the collapse, its consequences still occupy the English courts with numerous decided, settled, on-going and forthcoming cases. To mark the anniversary, Orrick's 'Legacy of Lehman' series of articles will consider the aftermath of Lehman's demise focusing on financial industry regulation in the UK and across Europe. We aim to consider certain key pieces of Lehman-related litigation in the English courts and the principles which resulted from those cases.
This first update in our Lehman series considers the introduction of the EU Bank Recovery and Resolution Directive (BRRD) which becomes mandatory across Europe on January 1, 2015. Subsequent topics will include the development of legal principles relating to client assets and the distribution of assets over which clients have proprietary interests, the distribution of surplus monies – the so called 'waterfall litigation,' the interpretation of ISDA contracts, pension issues and the introductions of European Market Infrastructure Regulations. To access the alert, click here.
Fed and CFPB Announce Thresholds for Regulation Z and Regulation M Exempt Consumer Credit and Lease Transactions
On September 9, the Fed and CFPB announced increases in the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. These increases are consistent with the Dodd-Frank Act amendments to adjust these thresholds annually by the annual percentage increase in the Consumer Price Index. Transactions at or below the thresholds are subject to the protections of the regulations. The adjustments will become effective on January 1, 2015. Fed Statement. CFPB Statement. Consumer Leasing Amendment. TILA Amendment.
CFTC Provides Relief from Certain Agency Regulations to be Consistent with JOBS Act SEC Amendments
On September 9, the CFTC issued an exemptive letter, which provides relief from certain provisions of Regulations 4.7(b) and 4.13(a)(3) restricting marketing to the public. The exemptive letter harmonizes these rules with Rule 506(c) of Regulation D and Rule 144A as amended pursuant to the JOBS Act. Release. Exemptive Letter.
SEC Proposes New Rule on Communications Involving Security-Based Swaps
On September 8, the SEC proposed a new rule that certain communications involving security-based swaps that may be purchased only by eligible contract participants will not be deemed for purposes of Section 5 of the Securities Act to constitute offers of such security-based swaps or any guarantees of such security-based swaps. Comments should be received by the SEC on or before November 10, 2014. Proposed Rule.
Agencies Propose Revisions to Q&A on Community Reinvestment
On September 8, the Fed, FDIC and OCC proposed revisions to the Interagency Questions and Answers Regarding Community Reinvestment. The Q&A provides guidance on the implementation of the Community Reinvestment Act (CRA). Among the other revisions, the revised Q&A address alternative systems for delivering retail banking and offer guidance on how examiners evaluate innovativeness in institution's products and services. Comments will be due 60 days after publication in the Federal Register. FDIC Statement. Fed Statement. Proposing Release.
SEC Adopts Final Reg AB II Rules
Orrick's Structured Finance Group published a summary of the final Regulation AB II rules adopted by the SEC on August 27, 2014. The new and amended rules govern the registration, offering process, disclosure and reporting for SEC registered asset-backed securities. The summary is available here and the final rules are available here.
SEC Adopts Final Rules Relating to NRSROs and Third-Party Due Diligence Reports
Orrick's Structured Finance Group published a summary of the final rules relating to NRSROs and Third-Party Due Diligence Reports adopted by the SEC on August 27, 2014. Among other things, the new and amended rules impose new obligations on ABS issuers and underwriters to publicly file third-party due diligence reports and require the providers of third-party due-diligence services to provide written certification to each NRSROs that produces a rating related to the due diligence services rendered. Issuers, underwriters, and providers of third-party due-diligence services must comply with the new rules discussed in the alert by June 15, 2015. Orrick Summary. Final Rules.
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