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Risk Retention Litigation: The Uncertainty Principle

January 26, 2018 - Many market participants have been closely following the LSTA’s risk retention lawsuit against the SEC and the Fed and many rumors have come to our attention concerning the status of the case.  Specifically, we have been hearing that the decision would come out this week (it did not) and that we will prevail (we may or we may not).  The following brief summary is meant to describe where we are now and explain what is actually likely to happen in the coming days or weeks. 

The oral argument for our case was held in Washington, DC, on October 10th before a three judge panel of the Court of Appeals for the DC Circuit.  The audio for that oral argument is available by clicking here and I urge you to listen (it takes a bit less than an hour).  The average time between an oral argument and the date of publication of an opinion for the DC Circuit is about three months but, like all averages, there is much variation from case to case.  A case may take longer than three months for many reasons. For example, there could be a split in the panel and a dissent by one of the judges which requires an exchange of drafts among the judges.  Or, the judge writing the opinion may have a very large workload, his or her clerks may be very stretched or frankly, the judge may consistently be slow in producing opinions.  Another reason a decision could take longer is if it presents complicated financial issues (which, some would argue, is the case with our credit risk argument).  In short, there could be many reasons why our case has not been decided yet but we do not know those reasons and no amount of “reading the tea leaves” will give us any better insights.  Similarly, until we read the final decision, we will not know whether we will have prevailed or not.  We can read the briefs, listen to the oral arguments and take a view and we can speculate all we want but the bottom line is that the only thing that counts is the opinion ultimately published by the panel. 

We are hopeful that the decision will come out in the coming days or weeks and we will immediately reach out to membership when it does, bearing in mind that opinions are typically only released on Tuesday and Friday mornings.   Once the decision is rendered we will immediately distribute it and schedule a webinar with our counsel from Sidley to explain the opinion and discuss what it may mean and the next steps.  If you have any further questions do not hesitate to reach out to me at [javascript protected email address] or 212 880 3003.

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