Firm Overview:Shearman & Sterling has a long and distinguished history of supporting its clients wherever they do business, from major financial centers to emerging and growth markets, for nearly 150 years. A titling trust is established to originate the lease and hold title to the leased assets. SOFR is a secured rate derived from borrowing and lending activities on US treasuries. A place like Shearman & Sterling one of the elite international law firms. Broker-dealers may be restricted from providing price quotations for private debt securities by virtue of Rule 15c2-11 unless certain periodic information and information about the issuer and the offering is made available to the public in a manner that complies with the SECs no-action letter issued on 30 November 2022. The CFTC has authority over most OTC derivatives, referred to as swaps in the Commodity Exchange Act (CEA), whereas the SEC has authority over OTC derivatives that fall within the Exchange Act definition of security-based swaps, which covers derivatives linked to single-name loans or securities, narrow-based indexes of loans or securities, events relating to such loans or securities, or their issuers. Establishing a bankruptcy-remote special-purpose entity (SPE) is a key aspect of a typical securitisation transaction. In addition, a non-consolidation opinion is often required if the transfer is to an affiliated entity (ASC 860-10-55-18A), although the opinion may not be required if the accountants are comfortable that the appropriate legal opinion(s) would be given if requested (id at 55-18B). The USA also does not include ABS among high-quality liquid assets (HQLA) in which a bank may invest to cover for its projected net cash outflows over a 30-day period (in the case of the liquidity coverage ratio). and 'Why Shearman & Sterling specifically?' US Summer Program. make payments based on cash flows and not based on changes in the issuers assets; not acquire or sell assets primarily for the purpose of realising market gains or minimising market losses; and. In addition to a robust, dedicated structured transactions practice, it offers key practice area expertise to support transactions, including tax, the Employee Retirement Security Act (ERISA), litigation, broker-dealer, real estate and investment company practice lawyers. failure, after expiry of the applicable cure periods, to turn over collections when required to do so; misrepresentations or breach of covenants; often, the occurrence of an event of default. Another tax issue that arises in connection with the use of foreign SPE issuers that are treated as corporations for US federal tax purposes is whether the SPE is engaged in a US trade or business for US federal income tax purposes. Its fast-paced, but you are never needlessly busy, a trainee told us. Conversely, the more numerous the sale characteristics, the greater the likelihood that a purported sale will be respected as such. A detailed description of the regulatory and other investment drivers for each of these diverse investor classes is beyond the scope of this summary; however, a few points that affect the structuring and offering of ABS are worth noting. Apply today at CareerBuilder! The Securities Act is the principal law governing the offer and sale of securities, and the Exchange Act provides the SEC with broad powers to regulate various market participants and prohibit certain types of conduct in the market, and empowers the SEC to require certain periodic reporting. SHEARMAN & STERLING JESSUP CUP WORLD CHAMPIONSHIP ROUND Final Round Judges MAURICE MENDELSON QC, Blackstone Chambers, London; H.E. The agency securitisation model and the related guarantees allow investors to focus primarily on the payment characteristics of the underlying pools of mortgages rather than the credit risk. However, Section 27B requires implementing rules to be passed within 270 days, and to date no such regulations have been put in place. Once all the applications have been submitted, trainees have an end-of-seat roundtable review with the training principal and hiring partners to discuss their prospects and interests. Registered rating agencies, referred to as NRSROs, are regulated by the SEC. 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). clarifying that the rules preempt any state or local law or standard relating to the selection or use of a benchmark replacement or benchmark replacement conforming changes. The firm has in-depth experience in all aspects of the public and private offering and distribution of structured finance securities. 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. Many of these changes do not appear to be focused primarily on asset-backed securities (ABS) or the securitisation markets, but present unforeseen and challenging consequences. 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. Shearman & Sterling advised the lenders, comprising Sumitomo Mitsui Banking Corporation, ING Bank NV, DBS Bank Ltd, Bank of China Limited, Mizuho Bank Limited and Socit Gnrale, on the refinancing of the 220 MW Bhola Combined Cycle Gas Turbine project in Bangladesh. Held here at our London office, the day will comprise of the following: An introduction to the industry and to Shearman & Sterling. This may change based on the most recent amendments to the rule, which, effective on 1 October 2020, clarify that a right to remove an investment manager for cause (as defined in the rule) is not an ownership interest. 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. If a credit event occurs under a CDS, then the SPE will fund its payment obligation with proceeds from the permitted investments. This no-action letter withdrew the December 2021 letter, but effectively extended Phase 1 under the December 2021 letter until 4 January 2025. degree of difficulty in segregating and ascertaining individual assets and liabilities; presence or absence of consolidated financial statements; profitability of consolidation at a single physical location; commingling of assets and business functions; unity of interests and ownership between the various corporate entities; existence of parent or intercorporate guarantees or loans; and. ABS issuers generally do not prepare financial statements. None of the Trusts acted or acts as the related lender, originator or servicer of such student loans; they are merely passive ownership entities that distribute collections to the related securitisation debt and equity investors while hiring third parties to undertake the requisite ongoing administrative and servicing activities on their behalf. Shearman & Sterling 2023 | Attorney Advertising, Committee on Foreign Investment in the United States (CFIUS), Financial Institutions Advisory & Financial Regulatory, Environmental, Social and Governance (ESG), EU General Data Protection Regulation (GDPR), Future of Financial Services Regulation in the UK, Global Compliance & Anticorruption (FCPA), Special Economic Zone and Regulatory Drafting. Shearman & Sterling advised Osaka Gas and its U.S. subsidiary Osaka Gas USA Corporation in connection with the agreement with Oriden LLC to jointly develop a portfolio of more than 700 MWdc (600 MWac) of utility-scale solar and storage projects throughout certain U.S. markets. The recommended benchmark replacement will be based on SOFR, including any recommended spread adjustment and benchmark replacement conforming changes. Many of these issues are addressed as part of the structuring of the SPE. This litigation has been ongoing through various motions. For most securitisations, risk retention may take any of three standard forms: The person required to retain the risk is the sponsor, defined as a person who organises and initiates an asset-backed securities transaction by selling or transferring assets, either directly or indirectly, including through an affiliate, to the issuer, a phrase that is substantially identical to the definition of sponsor under Regulation AB. Chambers and Partners has been publishing guides to the legal profession since 1990. The Section 3(c)(5) exemption is available for issuers securitising accounts receivable, loans to manufacturers, wholesalers, retailers or purchasers of specified merchandise, insurance or services, as well as for mortgages and other liens on and interests in real estate as long as a holder of any such issuers securities does not have the right to require early redemption of such securities. The issuer is subject to Exchange Act reporting requirements and the issuer has filed all required periodic reports during the prior 12 months or any shorter time it has been required to file reports. The minimum risk weight that will be given to a securitisation exposure is 20%. In the event that a pre-cessation event is operative, the ARRCs recommended five-year historical median spread adjustments will be determined at the same time as the ISDAs spread adjustments, which will be at the time of any announcement that LIBOR will cease or has ceased or will or has become no longer representative. Enforcement is usually a combination of events of default under the indenture, which gives the noteholders the right to direct the indenture trustee to take enforcement actions, and servicer defaults, which give the specified class or classes of noteholders rights to replace the servicer. 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