Orrick's Financial Industry Week in Review - January 17, 2012

by Orrick, Herrington & Sutcliffe LLP

Financial Industry Developments


CFTC Proposed Regulations on Volcker Rule

On January 11, the CFTC approved proposed rules implementing the requirements of Section 619 of the Dodd-Frank Act, otherwise known as the "Volcker Rule". The proposed rulemaking is substantively similar to the rulemaking jointly proposed by the Fed, the OCC, the FDIC, and the SEC in October 2011. However, the proposed rulemaking includes fourteen new questions relating to certain matters under the CFTC's jurisdiction, including the scope of the definition of "commodity pool" which is categorized as a "covered fund". Comments must be submitted within 60 days after publication in the Federal Register, which deadline will be at least 30 days after the deadline for submitting comments on the joint-agency proposed rulemaking. CFTC Release. CFTC Proposed Rule.


CFTC Final Rules on Registration of Swap Dealers and Major Swap Participants

On January 11, pursuant to Section 731 of the Dodd-Frank Act, the CFTC adopted final regulations which, among other things: (i) establish a registration process for swap dealers and major swap participants; (ii) require swap dealers and major swap participants to be members of a registered futures association; and (iii) subject "Push-Out Affiliates" to the same requirements. CFTC Release. 
CFTC Final Rule.


CFTC Final Rule on Protection of Cleared Swaps Customer Contracts and Collateral

On January 11, pursuant to Section 724(a) of the Dodd-Frank Act, the CFTC adopted a final rule regarding the protection of cleared swaps and collateral belonging to cleared swaps customers of futures commission merchants (FCMs). The CFTC adopted the Legally Segregated Operationally Commingled Model (LSOC Model, or Complete Legal Segregation Model), which provides that: (i) pre-bankruptcy, cleared swaps collateral of all FCM cleared swaps customers may be kept together in one account, but the FCM's own property must be kept segregated and (ii) post-bankruptcy, the collateral of one cleared swaps customer may not be used to cover the obligations of another cleared swaps customer or the FCM. CFTC Release. CFTC Final Rule.


CFTC Final Rules on Business Conduct Standards for Swap Dealers and Major Swap Participants

On January 11, the CFTC adopted final business conduct standards rules for swap dealers and major swap participants dealing with counterparties, which: (i) prohibit certain abusive practices; (ii) require disclosure of material information; and (iii) require due diligence relating to dealings with counterparties. CFTC Release.


SEC Guidance on European Sovereign Debt Exposure

On January 6, the SEC Division of Corporation Finance Staff issued guidance on disclosures relating to SEC registrants' exposures to European sovereign debt. The SEC Staff issued this guidance to correct inconsistencies in disclosures from registrant to registrant, requesting in part that a registrant: (i) disclose the basis for the countries selected for disclosure; (ii) provide disclosures separately by country, segregated between sovereign and non-sovereign exposures, and by financial statement category; and (iii) provide information regarding hedges in order to detail net funded exposure. SEC Guidance.


Rating Agency Developments


On January 11, Fitch updated its U.S. equipment lease and loan rating criteria. Fitch Release.

On January 11, Moody's updated its approach for monitoring CPDO transactions. Moody's Release.

On January 9, DBRS proposed methodology for CLOs and CDOs of large corporate credit and requested comments by January 27. 
DBRS Release.

On January 9, DBRS proposed cash flow assumptions for corporate CLOs and CDOs backed by other corporate debt and requested comments by January 27. DBRS Release.

On January 9, DBRS released its unified interest rate model for U.S. and European structured credit. DBRS Release.

On January 9, DBRS proposed methodology for surveillance Canadian CLOs and CDOs backed by debt of large corporations and requested comments by January 27. DBRS Release.

Note: Free registration is required for Moody's, Fitch, and DBRS releases and reports.




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 to register.


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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