Last year, I wrote a commentary entitled Contagion. That commentary was inspired by the early days of the meltdown of the crypto currency market (long before SBF made the whole space way more notorious with a whiff of...more
On January 25, 2023, the SEC reproposed its 2011 proposed rule to prohibit certain securitization participants from engaging in transactions that present conflicts of interest vis-à-vis ABS investors. This note answers a...more
Overview - Numerous regulatory developments were enacted or proposed in the United States and the European Union in response to the financial crisis. Although some of the proposed changes are still in the process of being...more
When the federal Consumer Financial Protection Bureau (“CFPB”) last summer issued its Advance Notice of Proposed Rule Making (“ANPR”) to revise the definition of a “Qualified Mortgage” (“QM”) under the Dodd-Frank Act’s...more
It is finally settled that the Credit Risk Retention Rule, adopted pursuant to Section 941 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, does not apply to open market CLO managers. ...more
This brief summary of the decision delivered on 9 February 2018 will be of interest to anyone involved in the CLO business in the United States....more
On February 9, 2018, the U.S. Court of Appeals for the District of Columbia Circuit Court (the “Court”) issued a significant decision in the case of Loan Syndications & Trading Ass’n v. SEC, No. 17-5004, --- F.3d ---, 2018 WL...more
On February 9, 2018, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit unanimously ruled in favor of the Loan Syndications and Trading Association (“LSTA”) in its lawsuit against the...more
In a case of first impression, the D.C. Circuit Court struck down the Dodd-Frank-mandated risk retention requirements for managers of open market collateralized loan obligations (CLOs). ...more
The D.C. Circuit Court of Appeals on February 9 reversed a summary judgment decision of the U.S. District Court for the District of Columbia and remanded the case with instructions to, among other things, vacate the rule...more
The Loan Syndications & Trading Association prevailed in its quest to eliminate credit risk retention requirements for open-market CLO managers, in a ruling that has other important implications....more
On February 9, 2018, the D.C. Court of Appeals ruled that treating managers of open-market CLOs as “securitizers” subject to the risk retention rules exceeded the statutory authority to promulgate rules to implement the risk...more
Possible changes would include loosening qualified asset requirements under risk retention rules, limiting asset-level disclosure under Reg. AB II, and rationalizing capital and liquidity requirements for securitized assets....more
In order to finance ABS interests retained as required by the credit risk retention rules, a securitization sponsor first must wend its way through a thicket of unclear and sometimes apparently contradictory requirements....more
Introduction - 17 C.F.R. Part 246, adopted jointly by the United States Securities and Exchange Commission (the “SEC”) and other federal agencies in October of 2014 (the “U.S. Risk Retention Rule”) was adopted in response...more
With the long-awaited U.S. rules requiring a level of risk retention in securitizations recently going into effect, an added wrinkle has been created by a slight difference in how “U.S. person” is defined in different...more
The challenges of complying with both the US rules and the EU rules. Both United States and European Union laws now require 5 percent credit risk retention for securitization transactions. While the jurisdictional scope...more
This month’s issue of Debt Dialogue address handover of records to a substitute collateral manager (in the Tilton litigation), the EU bail-in rules, the interplay of Section 3(c)(7) of the Investment Company Act and rights of...more
Industry participants looked forward to 2016 with a great deal of anticipation considering both the implementation of the risk retention rules, and the expected wall of maturities. By mid-year the first commercial...more
Commercial real estate has been financed in the U.S. capital markets through creation of commercial mortgage-backed securities (CMBS) since the early 1990s, peaking at $240 billion in 2007 and representing about 25% of all...more
In a complex securitization structure, determining the identity of the sponsor under the credit risk retention rules can be a daunting task. Introduction Under the credit risk retention rules adopted pursuant to the...more
Credit risk retention rules are intended to promote an alignment of interests between sponsors and investors of securitizations by requiring sponsors to maintain “skin in the game” — that is, retain a certain percentage of...more
The Dodd-Frank Act requires “securitizers” to retain at least five percent of the underlying credit risk. The Loan Syndications and Trading Association, or LSTA, challenged several aspects of the related rules jointly...more
The final rules for implementing Section 941 of the Dodd-Frank Act as it relates to credit risk retention will become effective December 24 of this year. With the effective date quickly approaching, Congress has stepped in to...more