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iosco technical committee on private equity November 29, 2007

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IOSCO has published a consultation report on private equity inviting comments by 20 February 2008. The report proposes that IOSCO should study conflicts management practices in private equity transactions and that the Joint Forum study leverage in private equity transactions.

subprime fallout: moving forward November 28, 2007

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Fitch Ratings says (registration required):

Beginning in January 2008, Fitch U.S. RMBS rating process will incorporate a more extensive review of mortgage origination/acquisition practices, including a review of originator/conduit/issuer due diligence reports, and a sample of mortgage origination files. Additionally, Fitch is studying how a more robust system of representation and warranty repurchases could help to provide more stable RMBS performance.

Via Housing Wire.

fsa and financial firms' websites November 28, 2007

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Today’s report from the FSA on its review of website financial promotions states that:

75% of the websites reviewed were of an acceptable standard; however, 25% fell short of our financial promotions standards. This is partly because firms are not placing enough emphasis on the customer journey and general website design when placing key information. In some instances general website maintenance was also lacking, resulting in out-of-date or incorrect information being provided to consumers.

The FSA has also identified problems with sponsored links on websites.

regulatory line drawing November 27, 2007

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The UK Government (Treasury and BERR) is consulting on the question of how to separate the functions of the OFT in respect of Consumer Credit and the functions of the FSA in relation to mortgages. The consultation responds to concerns identified by stakeholders:

Stakeholders have recently identified circumstances where some firms could potentially find themselves having to comply with both regimes simultaneously for certain types of transaction. This paper sets out the issues and the Government’s proposals for legislation to tackle these areas of potential dual regulation.

Before publishing the consultation document the Treasury and BERR discussed the issues with the Council of Mortgage Lenders, the FSA and the OFT (not apparently with any consumer groups, which raises issues about who gets to frame regulatory issues). Parts of the document are particularly technical and opaque:

In order to address these concerns the Government introduced legislation so as to disapply section 82(2) and section 82(3) wherever the modifying agreement was an RMC. In effect, this meant that the first agreement and the modifying agreement were treated as separate agreements for the purposes of the CCA. The RMC would be regulated only by the FSA and the first agreement would be subject to the CCA, where applicable. (footnote omitted)


innovation in advocacy November 27, 2007

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And a new initiative from the US Chamber of Commerce. This coming Friday a new series of talks begins, described as follows:

The advocacy world is constantly expanding, to stay ahead join us for the launch of the Innovative Advocacy Series. Hill staffers talk frankly about the advocacy campaigns that grab their attention, and which efforts they often disregard. Hear directly from the people you are trying to reach and find out what really influences a Congressional office from the people who work there.

It’s a snip at $225 for Friday’s event alone and $495 for the series. The series includes 4 events, one of which is on “Amassing a Grassroots Army to Engage in Election 2008”.

us financial regulation: competitiveness, principles… November 27, 2007

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The deadline for comments on the Treasury’s Capital Markets Competitiveness Initiative was last Wednesday. A joint comment letter (links to additional separate comments follow) from the US Chamber of Commerce, SIFMA, Investment Company Institute, Business Roundtable, Financial Services Roundtable, and Financial Services Forum begins:

The undersigned represent the voices of the millions of small and large businesses and their investors across the country and around the world that rely on the U.S. capital markets to fuel their investment and growth activities. Together, we commend the U.S. Department of the Treasury (“Treasury”) on its request for comment on the regulatory structure associated with the financial services industry.

I’m not sure what basis these organizations have for claiming to represent the interests of investors, except the claim, made explicitly later in the letter, that:

Investor protection and prudential safety and soundness must remain essential mandates. At the same time, these must be appropriately balanced with the goals of promoting capital formation and remaining competitive in an increasingly global environment. Indeed, these two priorities are mutually supportive and, appropriately pursued, will serve one another to the benefit of all market participants.

The letter advocates streamlining of the regulatory structure, principles-based regulation, and “addressing the adverse effects of the litigation environment in the U.S.”.

law, finance and translation November 26, 2007

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In the US, whatever an LLP is, it is not incorporated. So it is always striking to note, for example in reading the UK Department for Business, Enterprise and regulatory Reform (BERR) Consultation Document on the application of the Companies Act 2006 to LLPs, that British LLPs are incorporated.

northern rock looks to become virgin November 26, 2007

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Today’s Press Release from Northern Rock:

Following receipt of indicative expressions of interest covering a range of options in respect of its business, the Company and its advisors have engaged in discussions with a limited number of selected interested parties to clarify their proposals. As a result, and following discussions with the Tripartite Authorities (the Bank of England, HM Treasury and the Financial Services Authority), the Board has concluded that it wishes to take forward discussions on an accelerated basis with a consortium comprising Virgin Group, WL Ross & Co, Toscafund Asset Management LLP and First Eastern Investment Group (the “Virgin Consortium”).

Richard Branson’s letter to the customers of Northern Rock says:

At the heart of the Virgin proposal is a commitment to:
* Protect the savings of existing Northern Rock customers. The Government’s guarantee arrangements will continue until they are no longer needed
* Put the business on a solid financial footing with a multi-billion pound new equity and funding arrangement
* Stop the business being broken up and disbanded – saving thousands of jobs
* Put in place top quality management with world-class experience of banking
* Continue to support the Northern Rock charitable foundation – which does so much good work.

northern rock support as state aid November 19, 2007

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The UK Treasury announced a set of Principles for Assessing Proposals for the future of Northern Rock. The notes to the press release recognise that existing arrangements fior supporting Northern Rock constitute State Aid (which is regulated by the EU Commission) and that any proposals about the future would need to take account of State Aid rules:

State Aid rules would limit any ongoing public sector involvement even if it otherwise met the Tripartite Authorities’ objectives. Any ongoing State Aid measures beyond those currently in the course of notification to the European Commission would represent a potential risk to value and execution, because the European Commission may impose adverse conditions and may take additional time to approve such State Aid.
Proposals will be assessed against this backdrop, and should demonstrate how they have taken account of the State Aid rules in their development. All other things being equal, any proposal will be viewed favourably in so far as it is not conditional upon European Commission approval of further aid measures.

Meanwhile the Commission has an ongoing consultation on Rescue and Restructuring Aid Guidelines with a deadline for comments of 30 November. The Commission’s recent notice, Towards an effective implementation of Commission decisions ordering Member States to recover unlawful and incompatible State aid notes that the Commission has in recent years taken a stronger stance on State Aid, and that it is concerned to ensure the repayment of unlawful State Aid.

securities disclosure and state sponsors of terrorism November 19, 2007

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Of all the disclosure related issues securities regulators might have at the top of their lists, enhancing access to disclosures of issuers’ activities in or links with state sponsors of terrorism doesn’t seem like the most urgent. But on Friday the SEC issued a Concept Release on the subject. The first question says it all for me:

The Commission does not provide enhanced access to disclosures concerning other specific subject areas. Should we do so in this case? Why or why not?

The other questions aren’t bad either. Here’s the second:

Would providing easier access to companies’ disclosures of business in or with State Sponsors of Terrorism place appropriate emphasis on that issue or would it place undue emphasis? Would providing for easier access to such disclosures be consistent with the Commission’s mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation?