The National Association of Insurance Commissioners (NAIC) has adopted a risk-based capital (RBC) methodology intended to be a minimum regulatory capital standard based on the insurance companys risk profile and is one of the tools that give regulators legal authority to take control of an insurance company. We might arrange for them to have a coffee with a partner from that department, for example.. However, not all factors are given equal weight in this analysis. These are typically used in dealer floor plan securitisations and credit card securitisations. Issuers are typically SPEs that are restricted from engaging in activities unrelated to the securitisation. In particular, Reg AB II includes expanded asset-level disclosure requirements for registered offerings of securities backed by specified asset classes that reflects a significant departure from the pool-level information that historically has been given and that is still the dominant form of disclosure in private placements. Its clients, both issuers and underwriters, are among the most highly respected global financial services institutions and the practice understands the evolution of structures because it was involved in many of the industrys significant firsts. However, the recent October amendments to the Volcker Rule allow for a small bond basket, thereby removing one of the restrictions that have prevented CLO managers from engaging in a bond/loan arbitrage that was popular prior to the promulgation of the Volcker Rule. Plus Business Combination with Hennessy Capital Investment Corp. V. Shearman & Sterling is representing the banks who are acting as joint placements agents in connection with Plus business combination with special purpose acquisition company (SPAC) Hennessy Capital Investment Corp. V. Jiayuan International Group Limiteds $130 Million Senior Notes Offering. He regularly handles cross-border mandates. The qualities on which rankings are assessed include technical legal ability, professional conduct, client service, commercial astuteness, diligence, commitment and other qualities most valued by clients. For example, the Basel III capital rules penalise banks that invest below the most senior position in a securitisation, thereby impacting banks willingness to invest in mezzanine tranches and below. We like to see that, at the very least, candidates attended firm open days or other non-assessed events that shows they're committed to a career in the law., Around 5% of applicants go on to a first-round interview. Under the most recent no-action letter, the SEC staff will not take enforcement action against a broker-dealer that publishes, or submits for publication, quotations for fixed-income securities, if the broker-dealer reasonably has determined that the security or its issuer meets one of several specified criteria, or there is current and publicly available financial information (consistent with Rule 15c2-11(b)) about the issuer. The District Court subsequently granted a motion for an interlocutory appeal, which was granted by the US Third Circuit Court of Appeals on 3 May 2022. The SEC regulates the offer and sale of securities issued by a synthetic securitisation and the issuers Investment Company Act exemptions are the same as in a traditional securitisation. Masdar Floating Solar Photovoltaic Power Project in Indonesia. The opinion will usually identify these key factors and draw a conclusion based on the overall analysis and reasoning in the opinion letter. Among the reasonable determinations that qualify for relief are the following. A typical trainee day in the seat can range from doing legal research, helping draft submissions for tribunal hearings or doing some due diligence to helping file submissions and make sure documents are in correct shape with indexes. A couple of trainees even got the chance to attend hearings. With lawyers in New York, London, Washington DC, and Frankfurt, Shearman & Sterlings Structured Finance & Securitization Group assists clients in developing, structuring and executing a broad range of financings, including securitisations, structured products, asset-based lending, tailored leasing and royalty arrangements, and other sophisticated financing techniques. Because most collateralised loan obligation (CLO) transactions rely on Section 3(c)(7) of the Investment Company Act of 1940, as amended, for an exemption from investment company status, those CLOs constitute private funds within the meaning of the Advisers Act, and the proposed rules may therefore become applicable to those CLOs and related collateral managers, if adopted in their proposed form. The specific RBC formula varies depending on the primary insurance type and focus on asset risk, underwriting risk and other risk. The trustees tend to be large banking associations that satisfy relevant regulatory and ratings agency criteria such as requirements under the Trust Indenture Act (for registered ABS issuances) and as required by Investment Company Act Rule 3a-7, where the issuer relies on that exemption. The rankings highlight the London offices capabilities across multiple practice areas including Antitrust & Competition, Capital Markets, Corporate/M&A, Energy, Finance, Financial Regulatory/Financial Services, International Arbitration and Projects. L-shaped risk retention, by holding a combination vertical and horizontal risk retention that adds up to 5%. Fannie Mae and Freddie Mac are GSEs chartered by Congress for the purpose of providing a stable source of liquidity for the purchase and refinancing of homes and multi-family rental housing. The actual information about the pool only needs to be provided two business days prior to settlement. The rights of a purchaser of such assets attach if: Although it is possible for a security interest to attach in some circumstances without a written agreement, it is not practicable to rely on those circumstances always being present in a securitisation transaction. You hear that US firms have cut-throat cultures, but that isn't the case, one emphasised. Trainees whod experienced other vac schemes were won over by Shearman & Sterling: Some firms give you fake pieces of work and put on too many socials. Consequently, a key aspect of securitisations is to isolate the issuer and its assets from such bankruptcy risks by: As an alternative to a true sale structure, it is also possible to transfer exposure to the securitised assets using contracts that are protected against the most troublesome bankruptcy powers. Exchange Act Rule 17g-5 divides conflicts of interest into two categories: As part of the conflict rules in 17g-5, an NRSRO is required to obtain a representation from the issuer, sponsor or underwriter of an asset-backed security that it will post on a real-time basis information any of them provides to any hired NRSRO in connection with the initial credit rating or subsequent credit surveillance to a password-protected website. The team is a recognised global leader in the structured finance industry, domestically and internationally. A titling trust is established to originate the lease and hold title to the leased assets. Payments based on US-source income to foreign individuals and corporations are potentially subject to withholding tax. 5 Contributions provided by Shearman & Sterling LLP, The general counsel's comprehensive guide | USA. Ltd. on its acquisition of Korchina Logistics Holdings Limited. Shearman & Sterling is excellent not only in legal matters but one of their important strengths is in providing strategic advice to clients. They do not go with ready-made solutions but actually listen to client needs and address their services and advice accordingly. As such, the TBA market permits lenders to lock in rates for mortgages before they are originated, which, in turn, allows borrowers access to lower, locked-in rates. The primary investor protections follow from the general and specific securities laws described in this chapter. The firms structured transactions practice serves the financing needs of the worlds most sophisticated businesses. Whether this option covers registered ABS that are subject to Exchange Act reporting requirements but where those requirements were suspended before ABS issuers had to file for the life of the deal poses an interpretive question. The issuer will receive cash flows from the permitted investments and the CDS protection premiums. Equity partner profits are roughly comparable between $2.5M and $3M. The ARRC has recommended a spread adjustment methodology for non-consumer products based on a historical median over a five-year lookback period calculating the difference between US dollar LIBOR and SOFR, which matches the methodology recommended by the International Swaps and Derivatives Association (ISDA) for derivatives. The structure also allows for some series to be in their revolving period while other series are in their amortisation period. Certain types of LIBOR fallback provisions will be disregarded: provisions that base the LIBOR replacement in any way on a LIBOR value, except to account for the difference between LIBOR and the benchmark replacement; and. Investors in unfunded ABS tranches will typically have contingent funding obligations and may be required to provide additional credit support or face replacement if their credit drops below agreed levels. Such information would be a very brief statement of the nature of the business of the issuer and the products and services it offers; and the issuers most recent balance sheet and profit and loss and retained earnings statements, and similar financial statements for such part of the two preceding fiscal years as the issuer has been in operation (the financial statements should be audited to the extent reasonably available).. Shearman & Sterlings Tax practice plays an integral role in the firms corporate and cross-border practice and provides tax capability in France, Germany, the United Kingdom and the United States. Sunac China Holdings Limiteds $400 Million Bond Offering and $100 Million Tap Offering. Furthermore, the CFTCs authority to penalise manipulation and fraud is similar to the SECs authority under Section 10(b) of the Exchange Act. Investors in securitisations include banks, asset managers, insurance companies, pension funds, mutual funds, hedge funds and high net worth investors. Wilful violations and abuse of the end-user clearing exception are felonies punishable by a fine of up to USD1 million or imprisonment for up to ten years, or both, together with cost of prosecution (see CEA Section 13). Rule 15c2-11 under the Securities Exchange Act of 1934 (Exchange Act) allows brokers or dealers to initiate or resume trading quotes on OTC securities not listed on a national securities exchange by requiring them to obtain and review specified issuer information prior to publishing or submitting for publication a quotation on the securities. In turn, this has allowed for the emergence of a highly liquid to-be-arranged (TBA) market, where pools of MBSs are deemed to be fungible, and traded, on the basis of a few basic characteristics, such as the issuer, amortisation type (eg, 30 years or 15 years), the coupon rate, the settlement date and the maximum number of mortgage securities per basket. Candidates are asked the usual 'Why law?' A security interest perfected by control or possession often has higher priority than a security perfected by other means. SOFR differs from LIBOR in several key respects. In a typical securitisation the investors will have a right to payment, and investors will also have certain rights to direct the trustee to take enforcement actions, and the controlling class of noteholders will thereafter have enhanced ability to direct the trustee in accordance with the terms of the transaction documents. The proposed rules would also prohibit private fund advisers from engaging in certain compensatory and other practices which have the effect of creating conflicts of interests between private funds and their advisers. Its team of more than 170 researchers conducts research and interviews with lawyers, clients and other independent sources to identify leading law firms and lawyers. The most typical credit enhancements include over-collateralisation, subordination of junior tranches, cash reserves and excess yield on the underlying assets compared to what is needed to service the asset-backed fixed-income securities. If a credit event occurs under a CDS, then the SPE will fund its payment obligation with proceeds from the permitted investments. The SEC has the power to enforce its rules. The required asset-level disclosure must be provided in a standardised format in a tagged XML format and filed on the SECs Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system. Training contract deadline: Apply for a training contract through a vacation scheme. For subsequent seats however, trainees submit a form with five ranked practice groups, including reasons for each of their choices. The agencies may also impose civil monetary penalties that can range between USD5,000 and USD1 million per day, and it may seek to impose removal and prohibition orders against any institution-affiliated party (a potentially broad list of persons), which may remove and potentially bar the person from participating in the business of the relevant banking entity or other specified entities. In fact, many of these elements are present in most bankruptcy cases involving holding company structures or affiliated companies without thereby leading to substantive consolidation. While the decision does not constitute binding precedent, other judges in different jurisdictions are likely to give the decision significant weight in a case presenting the same general questions. The project development side covers projects-related M&A in sectors like energy, mining and transportation, with the project finance wing overseeing the financing of infrastructure projects in these sectors through their entire life cycle. As one trainee put it, the seat is a good one if you enjoy black letter law. Shearman & Sterlings regional expertise extends from North and South America to the Middle East, Asia, Africa and Europe. specific greenhouse gas emission metrics. This option reinforces the notion that registered ABS where the issuer is subject to Exchange Act reporting requirements do not pose compliance issues under the Rule 15c2-11(b). The team is split between project development work, and the project finance side of things, one trainee explained. Shearman & Sterling advised IFC on the first housing bond issued in Bangladesh, provided to BRAC Bank Limited. The DoddFrank Act added a new Section 27B to the Securities Act intended to address certain conflicts of interest that, if implemented, could create significant hurdles for synthetic securitisations. We also expect candidates to be able to speak knowledgeably about our place in the industry at large, Gascoyne says. Consequently, in order to be attractive to banks, securitisation entities tended to avoid becoming a covered fund under the Volcker Rule. To be eligible for the relief provided under these no-action letters, the securitisation issuer must: The CFTC has also issued various interpretations that allow certain securitisation SPEs that are wholly owned subsidiaries of non-financial entities to avail themselves of certain exceptions from otherwise applicable clearing and margin requirements available to non-financial end users. Ownership interest is a broad term that captures, among others, any security with equity-like returns or voting rights (including the right to replace the investment manager, which is typically a right of the senior-most class of investors in the event of such managers default). At a base level, future trainees need a minimum AAB at A level and 2:1 degree. In the case of foreign SPEs that are treated as corporations for US income tax purposes and that rely on not being taxed in the USA, there are various sensitive activities that could give rise to adverse tax treatment. This no-action letter withdrew the December 2021 letter, but effectively extended Phase 1 under the December 2021 letter until 4 January 2025. Not surprisingly, the more numerous the secured loan characteristics, the greater the likelihood that the transaction is viewed as such. The comprehensive regulation applicable to banks results in a parallel regulatory structure in the context of banks sponsoring securitisations that will apply to certain aspects of a securitisation transaction by banks. Morgan, Lewis & Bockius LLP As such, the mapping of ABS assets to an NAIC rating will often dictate the attractiveness of a particular asset-backed security for an insurance company. The firms success is built on its clients success. annual reporting or proxy disclosure about directors cybersecurity expertise. oversight and governance of climate-related risks; how climate-related risks, including those that are reasonably likely to have a material impact on business or financial statements, may affect business; how climate-related risks have affected or are likely to affect strategy, business model and outlook; processes for identifying, assessing and managing climate risks and how those processes fit into overall risk management; impact of climate-related events and transition activities (such as policy changes) on the financial statements and financial estimates; and. Investors constitute a diverse group. Registered rating agencies, referred to as NRSROs, are regulated by the SEC. Regularly advises on complex tax planning and structuring matters. 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