Orrick's Financial Industry Week In Review

by Orrick, Herrington & Sutcliffe LLP

Financial Industry Developments

Fed Proposes Implementing Section 622 of Dodd-Frank

On May 8, the Fed invited comment on a proposed rulemaking that would implement Section 622 of Dodd-Frank, which prohibits a financial company from combining with another company if the ratio of the resulting financial company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.  Press Release

CFPB Proposes Rule to Promote More Effective Privacy Disclosures

On May 6, the CFPB proposed a rule to promote more effective privacy disclosures from financial institutions to their customers. The rule would allow companies that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually.  Press ReleaseProposed Rule.

FDIC Issues List of Banks Examined for CRA Compliance

On May 5, the FDIC issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA).   Press Release

OCC Releases CRA Evaluations for 41 National Banks and Federal Savings Associations

On May 1, the OCC released a list of CRA performance evaluations that became public during the period of April 1, 2014 through April 30, 2014. Of the 41 evaluations made public this month, five are rated outstanding, 36 are rated satisfactory, none are rated needs to improve, and none are rated substantial noncompliancePress ReleaseEvaluations

CFTC Further Implements Trade Execution Requirement

On May 1, the CFTC's Division of Market Oversight (DMO) and Division of Clearing and Risk (DCR) announced the further implementation of the trade execution requirement for certain interest rate and credit default swaps.  Press Release

Rating Agency Developments

On May 8, Kroll released a research report discussing the housing sector impact on financial institutions. The April 2014 survey of Senior Loan Officers conducted by the Fed shows that reports of weaker demand outnumbered reports of stronger demand for each type of residential real estate loan, while the opposite pattern held for credit card and auto loans.  Kroll's Report.

On May 2, Moody's released its approach to rating transactions backed by portfolios of Hedge Fund InvestmentsMoody's Report.

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

Distressed Debt and Restructuring Developments

Bankruptcy Court Approves Detroit Disclosure Statement; Plan Goes to Creditors

On May 5, U.S. Bankruptcy Judge Steven Rhodes approved the City of Detroit's Disclosure Statement detailing its proposed Plan of Adjustment.  The Court authorized the City to begin the solicitation of votes on the Plan.  Confirmation hearings are scheduled for the second half of July.  Disclosure Statement

Court Approves Energy Future Holdings' Interim DIP Financing

After several days of "first day" hearing in the bankruptcy case of Energy Future Holdings Corp (formerly TXU), Bankruptcy Judge Christopher Sontchi in the District of Delaware Bankruptcy Court authorized the Debtors to move forward with their interim post-petition financing.  The Court permitted EFH to borrow $2.3 billion out of a $4.5 billion total financing package.  A hearing on the Final Order is set for June 5, 2014.  Interim Order.

Asset Management

SEC Issues Investor Alert Regarding Bitcoin and Other Virtual Currency Related Investments

On May 7, the SEC's Office of Investor Education and Advocacy issued an Investor Alert to make investors aware about the potential risks of investments involving Bitcoin and other forms of virtual currency.  Investor Alert

RMBS and Other Securities Litigation

California Court Refuses Equitable Tolling for RMBS Claims

A recent decision dismissing an RMBS lawsuit in the Los Angeles County Superior Court highlights the critical importance of filing your claims in the correct court whenever there is a jurisdictional issue.  By rejecting the plaintiff's equitable tolling arguments and applying the appropriate statutory limitations periods, the decision is notable because it arguably conflicts with similar decisions by other state courts involving similar RMBS claims.  Orrick has previously written about the application of statutes of limitations to RMBS claims, which may be viewed here.  For more information from our Securities Litigation blog, please click here.

U.S. Bank Wins Partial Dismissal of Investor Claims

On May 5, Judge Katherine Forrest of the U.S. District Court for the Southern District of New York granted U.S. Bank's motion to dismiss certain of the claims brought by the Policemen's Annuity and Benefit Fund of the City of Chicago and the Washington State Investment Board.  The suit relates to RMBS certificates backed by loans originated by Washington Mutual.  The court dismissed claims related to trusts for which no named plaintiff held certificates, or where the named plaintiff held certificates before U.S. Bank became the trustee.  Plaintiffs' claims on the other remaining 11 trusts will proceed.  Order.

NCUA RMBS Suit against Wachovia to Proceed

On May 6, Judge Denise Cote of the U.S. District Court for the Southern District of New York denied Wachovia Capital Markets' motion to dismiss claims brought by the National Credit Union Administration.  In the suit, NCUA alleges misstatements and omissions by Wachovia in offering documents used to sell RMBS to two credit unions.  The court held that the complaint sufficiently alleged that AmNet, the originator of the underlying mortgage loans, was concerned with origination volume and not the quality of the loans or the ability of the borrowers to repay.  The court cited allegations of poor performance of the certificates as support for NCUA's claims.  The court also held that loan-to-value ratios may constitute actionable statements of fact, and are not necessarily subjective opinions as to which liability can exist only upon a showing that the opinion was not believed to be true when made, because some are based on purchase price, rather than appraisal values.  NCUA had sufficiently pleaded significant deviations between the reported appraisal values and the actual values of the mortgaged properties.  Finally, the court held that misstated debt-to-income ratios were sufficiently pleaded when viewed in the context of plaintiff's other allegations, including alleged delinquency statistics.  Order.

European Financial Industry Developments

British Bankers' Association Publishes Updated Anti-bribery and Corruption Guidance

On May 6, the British Bankers' Association published updated guidance on its website relating to anti-bribery and corruption.  The document highlights key issues in meeting UK legal and regulatory requirements for preventing bribery and corruption.  Guidance.   

European Commission Decisions on Equivalence of Overseas Legal and Supervisory Frameworks Published

On May 6, implementing decisions of the European Commission were published in the Official Journal of the EU.  The European Commission has determined that the legal and supervisory frameworks for credit rating agencies in Argentina, Brazil, Hong Kong, Mexico and Singapore are equivalent to the requirements of the Regulation on Credit Rating Agencies (Regulation 1060/2009).  Decision.  

Council of the EU Adopts Bank Recovery and Resolution Directive

On May 6, the Council of the EU adopted at first reading the text of the Bank Recovery and Resolution Directive (BRRD).  The BRRD seeks to harmonize national legislation of Member States in relation to bank resolution and recovery.

Among other things, the BRRD will enable authorities to write down or convert into equity certain claims of shareholders and creditors of failing banks (bail-in).   Some liabilities will be permanently excluded from bail-in, including deposits below €100,000.

Member States will have until December 31, 2014, to implement the BRRD into national law.  Press ReleaseBRRD Text


Orrick's Annual Financial Services Roundtable, June 11

Members of Orrick's Employment Law & Litigation Group invite you to join an interactive discussion of critical employment law issues impacting the financial services industry. Roundtable discussion topics include wage-and-hour cases impacting the financial services industry, employee background checks, update on EEOC and OFCCP enforcement initiatives for 2014 and the latest whistleblower law developments under federal and new California state law.  For more information and to register for this event, please click here


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.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP

Orrick, Herrington & Sutcliffe LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.