U.S. Risk Retention Decision

In an important decision, the U.S. Court of Appeals for the District of Columbia Circuit (the “Court”) held on February 9, 2018 that the Dodd-Frank Act does not authorize U.S. federal regulators to require that collateralized loan obligation (“CLO”) managers comply with the requirements of the U.S. credit risk retention rule (the “Credit Risk Retention Rule”) where the collateral for the CLO is acquired on the open market.  The Court concluded that an open-market CLO manager is not a “securitizer” within the meaning of the Credit Risk Retention Rule, and therefore outside its scope.

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