Orrick's Financial Industry Week in Review - January 23, 2012

by Orrick, Herrington & Sutcliffe LLP

Financial Industry Developments


FDIC Final Rule on Resolution Plans

On January 17, the FDIC approved a final rule which requires insured depository institutions with $50 billion or more in total assets to submit periodic contingency plans to the FDIC for resolution in the event of the institution's failure.  The resolution plans will ensure that: (i) depositors receive access to insured deposits within one business day of the institution's failure (or within two business days if the failure occurs on a day other than a Friday); (ii) the net-present-value return from the sale or disposition of its assets is maximized; and (iii) the amount of any loss to be realized by the institution's creditors is minimized. The final rule will be effective on April 1. FDIC Release. 
FDIC Final Rule.


FDIC Proposed Stress Testing for Large Banks

On January 17, the FDIC approved a notice of proposed rulemaking to implement Section 165(i)(2) of the Dodd-Frank Act, which would require FDIC-insured state nonmember banks and FDIC-insured state-chartered savings associations with consolidated assets of more than $10 billion to conduct annual capacity-adequacy stress tests. Comments must be submitted within 60 days of publication in the Federal Register. FDIC Release. Proposed Rule.


SEC Amendment for Covered Securities on BATS Exchange

On January 20, the SEC amended Rule 146 under Section 18 of the Securities Act to designate certain securities listed on BATS Exchange, Inc. as covered securities which are exempt from state law registration requirements. The amendment will be effective 30 days from the date of publication in the Federal Register. Final Rule.


Rating Agency Developments


On January 18, Fitch updated its short-term rating criteria for non-financial corporates. Fitch Release. Fitch Report.

On January 17, S&P requested comment on proposed changes to methodologies and assumptions used to rate fully and partially credit-enhanced multiseller ABCP conduits. Comments must be submitted by March 31. S&P Release.

On January 17, S&P requested comment on its European SME CLO methodology and assumptions. Comments are due by February 24. S&P Release.

Note: Free registration is required for S&P and Fitch releases and reports.


Asset Management


SEC No-Action Letter on the Registration of Affiliates of Registered Advisers

On January 18, the SEC Division of Investment Management issued a No-Action Letter in response to a request from the American Bar Association Subcommittee on Hedge Funds, exempting from registration under the Investment Advisers Act of 1940 certain control affiliates of SEC registered advisers, subject to the fulfillment of certain conditions. The No-Action Letter also confirms prior SEC staff guidance from 2005, which provides a registration exemption to special purpose vehicles created by registered advisers. 
SEC No-Action Letter.


RMBS Litigation


CUNA Mutual Group Sues RBS Over RMBS

On January 17, 2012, RBS Securities removed to the Western District of Wisconsin an action brought by credit union insurance companies against RBS involving the sale of RMBS. The bases for RBS's removal petition include diversity jurisdiction and related to bankruptcy jurisdiction. The case originally was filed on December 14, 2011, in the State of Wisconsin Circuit Court by Credit Union National Association Mutual Insurance Society, CUMIS Insurance Society, and Member Life Insurance Company. The insurance companies seek rescission of $72 million in RMBS securities, alleging that RBS inflated the value of the mortgages and knowingly made material misrepresentations about underwriting standards and the collateral backing the loans. Notice of Removal. Complaint.


M&T Bank Corp Settles CDO Suit Against Deutsche Bank for $55 Million

In a January 17, 2012 press release and 8-K reporting its financial results for the fourth quarter, M&T Bank Corp announced the settlement of a 2008 lawsuit against Deutsche Bank Securities and other entities. The suit, filed in the Supreme Court for the State of New York, alleged that Deutsche Bank made misrepresentations when marketing an $82 million investment of the Gemstone CDO VII, underpinned by subprime home loans. M&T Bank Corp reports that it received $55 million from the settlement. Current Report.




American Securitization Forum 2012 Conference

January 22-25, 2012 – ASF 2012 is the largest capital markets conference in the world. Hosted by the American Securitization Forum in Las Vegas, NV., the conference attracts the industry's top professionals where they will discuss the most relevant topics and challenges in the industry. Orrick is an Advocate-level sponsor, and several partners, of counsel and associates will attend. On January 23, Michael Mitchell will be speaking on a panel regarding The Volcker Rule & Conflicts of Interest. On January 24, Howard Altarescu will be moderating a panel on Comparative Mortgage Finance Systems, and Barry Levin will be speaking on a panel regarding Mortgage Litigation. Click here for more information.


The Volcker Rule – The Institutional Investor and Financing Perspective

January 26, 2012 – Orrick is partnering with the American College of Investment Counsel (ACIC) to offer a CLE presentation on The Volcker Rule. Ed Eisert, Corporate and Regulatory partner in Orrick's New York office, will be speaking live in San Francisco with the presentation being telecast to the Orrick office in Los Angeles. There will be networking receptions in each location following the presentation. Topics to be addressed in the presentation include: 1) Treatment of Insurance Companies 2) The Sponsorship and Ownership of Private Funds 3) Compliance Programs 4) Conformance Period Activities 5) Form PF Reports. Click here for more information.


Cross-Border Implications of the Bounty and Whistleblower Protection Provisions of Dodd-Frank

January 26, 2012 – A panel of Orrick partners from its offices in Europe and Asia and leading cross-border investigation experts from the global consulting firm FTI Consulting will address the current environment on whistleblower reporting, best practices in internal investigations and what companies should be doing to encourage internal reporting. The program, to be held in Orrick's San Francisco office, will be followed by a cocktail reception. Click Here to RSVP.


A New Era of Federal Prosecutions: Challenges for Main Street and Wall Street

February 2, 2012 – The Director's Roundtable will be presenting a panel discussion in New York on key issues related to the new wave of investigations launched by the Securities and Exchange Commission, Department of Justice, and FBI. At the center of the investigations are public companies and financial institutions, as well as so called "expert networking" firms that provide investment information. Orrick partner Amy Ross will moderate. Click here to register.


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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