Here are a few items that caught our attention this week:

  • On the SEC’s additional material disclosure events: “Event 15” and “event 16” went into effect on February 27, 2019.  These additions address the growing use of private, or direct, placements and disclosure of those in borrower “undertakings” — that is, a borrower’s promise to disclose material events in the future.  Also addressed are situations where “financial obligations” may be accelerated, terminated or modified if the event reflects financial difficulties.  Financial obligations have been broadened beyond only public capital markets.  Changes only relate to financial obligations incurred after February 27, 2019.  Click here for a brief, clear explanation of the change.
  • On the transition from LIBOR to SOFR:  Here is a clear discussion about this change, which was made after regulators became concerned that price-setting of LIBOR was and could be manipulated.  Since the replacement SOFR (Secured Overnight Floating Rate) is collateralized, there would likely be costs for borrowers facing the transition.  Investors and borrowers should review their documents to see if they need to be modified and also assess potential costs for moving from an unsecured to a secured benchmark.
  • We read a number of commentaries that link recent regulatory changes for large banks to the significant drop in the stock market between October and December.  Our colleague David Kotok puts this together and bank analyst Chris Whalen interviewed him, also on this topic.  The last piece is a dense, detailed letter for non-bank analysts from Goldman Sachs to the Federal Reserve Board of Governors, Here, here, here and here 
  • And Just Because:  A few pieces about what was known about the Boeing 737 MAX 8 and when by the Daily Beast and Washington Post (there may be a paywall, not sure) How are the potholes in the oversight process further eroding our confidence in the U.S. government?  We also note that the Oklahoma City Training Academy for air traffic controllers was closed during the government shutdown, exacerbating an already short-staffed air traffic control system.  While the shutdown is over, re-scheduling training programs is not that simple.  Also, the FAA has no permanent leader at this time and Ethiopia chose to send the “black box” from the downed aircraft to France for analysis and not the United States.