latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/leveraged-loan-news/lsta-files-suit-against-fed-sec-over-clo-risk-retention content
BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
PRIVACY & COOKIE NOTICE
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

LSTA files suit against Fed, SEC over CLO risk retention

Despite investor appetite, April European leveraged loan issuance slumps to €2.5B

Has cov-lite leveraged loan issuance finally peaked?

Leveraged Finance Fights Melanoma Benefit set for May 22 in NYC

Amid retail investor retreat, high-flying leveraged loan asset class begins to shrink


LSTA files suit against Fed, SEC over CLO risk retention

The Loan Syndications and Trading Association (LSTA) has filed a lawsuit against the Federal Reserve and the Securities Exchange Commission over the final risk-retention-rule release last month.

The petition for review, filed Nov. 10, alleges the final rule is “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The petition for review represents the first step in legal proceedings that the LSTA has taken against regulators in an effort to provide the CLO market with relief from the final risk-retention rule, which will require CLO managers to retain 5% of the deal. It is expected to take effect in about two years.

The LSTA said it filed the suit “reluctantly” and as a last resort. “The LSTA believes the regulatory agencies’ one-size-fits-all solution to risk retention with respect to collateralized loan obligations (CLOs) disproportionately punishes an industry that was not involved in the financial crisis, suffered practically no losses and currently provides critical financing to over 1,000 non-investment-grade companies,” LSTA executive director Bram Smith said in a statement.

“We have sought a reasonable solution for years and worked tirelessly to provide the agencies with workable and practical options because we believe the negative impact of the risk-retention rule on the CLO market and broader economy will be significant,” Smith added. “None of our material proposals were implemented into the rule.” – Kerry Kantin