Sector developments and company hires

Volcker changes finalised
The CFTC, FDIC, OCC, SEC and US Fed have finalised a rule modifying the Volcker Rule's prohibition on banking entities investing in or sponsoring hedge funds or private equity funds – known as covered funds. The final rule is broadly similar to the proposed rule from January (SCI 31 January).

Like the proposal, the final rule modifies three areas of the rule by: streamlining the covered funds portion of the rule; addressing the extraterritorial treatment of certain foreign funds; and permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker Rule was intended to address. The rule will be effective on 1 October.

An initial statement from the Loan Syndications and Trading Association (LSTA) welcomes the move, highlighting the amendment of the rule’s loans securitisation exclusion to permit CLOs to hold loans, cash equivalents and up to 5% in debt securities (excluding ABS and convertibles). Further, the LSTA notes that ownership interest will not include CLO notes that permit removal and replacement of the manager for cause, even in the absence of an event of default.

In other news…

BUMF battles continue
The Business Mortgage Finance 4, 5, 6 and 7 issuers have informed noteholders that Alfred Olutayo Oyekoya and Talisman Granular Holdings are holding themselves out as having been appointed trustees in relation to the transactions, pursuant to a purported board resolution passed at a purported board meeting on 9 June. Talisman is a company associated with Oyekoya and Rizwan Hussain.

The purported directors of the issuers said to have passed the purported 9 June resolution are Oyekoya, Hussain, Rajnish Kalia, Jai Singh, Callon Shared Equity (CSEL) and Portfolio Logistics (PLL). In addition, Hussain is holding himself out as chairman of the issuers.

Oyekoya and/or Hussain have also purported to take other steps in relation to the issuers, including: terminating the role of Target Servicing as special servicer and cash/bond administrator and appoint Callon Capital Management (a company associated with Oyekoya and Hussain) as a replacement; and appointing CSEL as financial advisor to the issuer.

Further, the issuers wishes to inform noteholders that: Coral Suzanne Bidel, Beejadhursingh Surnam and Marc William Speight remain the only directors of the issuers; and the sole trustee remains BNY Mellon, which will only take instructions from the parties (and their legitimate successors) referred to and in accordance with the provisions of the transaction documentation. The issuers consider the actions purportedly taken by Oyekoya, Hussain and their associates to be entirely invalid and ineffective.

The move contradicts a notice indicating that the issuers are “actively looking to pursue a strategy…to seek to implement a full redemption of the notes as soon as possible”. The same notice states that remuneration of CSEL is through a periodic retainer and a 'success' fee, which is due when all noteholders have been repaid in full.

Further, it states that the issuers terminated all authority given to Simmons & Simmons and appointed new solicitors. Finally, legal proceedings have commenced to seek damages against: Simmons & Simmons and its partner Richard Bunce for £2.36m; and Target Servicing for £210.72m.

TPR status affirmed
Evolve Mortgage Services has been added to Fitch’s list of 'acceptable' third-party review providers for loans included in rated RMBS. Evolve is now an acceptable TPR provider for Fitch, DBRS Morningstar, KBRA, Moody's and S&P.