McGraw Hill Financial (MHFI) Receives 'Wells Notice' from U.S. SEC Jul 23, 2014 05:03PM

McGraw Hill Financial (NYSE: MHFI) filed a Form 8-K with the U.S. Securities and Exchange Commission (the "Commission") acknowledging that on July 22, 2014, it received a "Wells Notice" from the Commission Staff stating that the Staff has made a preliminary determination to recommend that the Commission institute an enforcement action against Standard & Poor's Ratings Services ("S&P"), alleging violations of federal securities laws with respect to S&P's ratings of six commercial mortgage backed securities transactions issued in 2011, and public disclosure made by S&P regarding those ratings thereafter. In connection with the contemplated action, the Staff may recommend that the Commission seek remedies that include a cease-and-desist order, disgorgement, pre-judgment interest, civil money penalties, and remedial sanctions such as revocation or suspension of S&P's NRSRO registration.

The Wells Notice is neither a formal allegation nor a finding of wrongdoing. It allows S&P the opportunity to provide its perspective and to address the issues raised by the Staff before any decision is made by the Commission on whether to authorize the commencement of an enforcement proceeding. S&P has been cooperating with the Commission in this matter and intends to continue to do so.


SEC Adopts Money Market Fund Reform Rules Jul 23, 2014 02:39PM

The Securities and Exchange Commission today adopted amendments to the rules that govern money market mutual funds. The amendments make structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds.

Today’s rules build upon the reforms adopted by the Commission in March 2010 that were designed to reduce the interest rate, credit and liquidity risks of money market fund portfolios. When the Commission adopted the 2010 amendments, it recognized that the 2008 financial crisis raised questions of whether more fundamental changes to money market funds might be warranted.

The new rules require a floating net asset value (NAV) for institutional prime money market funds, which allows the daily share prices of these funds to fluctuate along with changes in the market-based value of fund assets and provide non-government money market fund boards new tools – liquidity fees and redemption gates – to address runs.

“Today’s reforms fundamentally change the way that money market funds operate. They will reduce the risk of runs in money market funds and provide important new tools that will help further protect investors and the financial system,” said SEC Chair Mary Jo White. “Together, this strong reform package will make our markets more resilient and enhance transparency and fairness of these products for America’s investors.”

With a floating NAV, institutional prime money market funds (including institutional municipal money market funds) are required to value their portfolio securities using market-based factors and sell and redeem shares based on a floating NAV. These funds no longer will be allowed to use the special pricing and valuation conventions that currently permit them to maintain a constant share price of $1.00. With liquidity fees and redemption gates, money market fund boards have the ability to impose fees and gates during periods of stress. The final rules also include enhanced diversification, disclosure and stress testing requirements, as well as updated reporting by money market funds and private funds that operate like money market funds.

The final rules provide a two-year transition period to enable both funds and investors time to fully adjust their systems, operations and investing practices.

Norm Champ, director of the SEC’s Division of Investment Management, said, “Today’s adoption of final money market fund reforms represents a significant additional step to address a key area of systemic risk identified during the financial crisis. These reforms are important both to investors who use money market funds as a cash management vehicle and to the corporations, financial institutions, municipalities and others that use them as a source of short-term funding.”

The SEC today also issued a related notice proposing exemptions from certain confirmation requirements for transactions effected in shares of floating NAV money market funds. Additionally, the SEC re-proposed amendments to the Commission’s money market fund rules and Form N-MFP to address provisions that reference credit ratings. The re-proposed amendments would implement section 939A of the Dodd-Frank Wall Street and Consumer Protection Act of 2010, which requires the Commission to review its rules that use credit ratings as an assessment of credit-worthiness, and replace those credit-rating references with other appropriate standards.

The rules adopted today will be effective 60 days after their publication in the Federal Register, and the re-proposal will have a 60-day public comment period following its publication in the Federal Register.


Doral Financial (DRL) Receives Favorable Court Ruling Jul 23, 2014 08:53AM

As previously disclosed, on June 5, 2014 Doral Financial (NYSE: DRL) and certain of its subsidiaries (collectively, “Doral”) filed a lawsuit against the Commonwealth of Puerto Rico, the Puerto Rico Department of the Treasury (the “Treasury Department”) and the Secretary of the Treasury Department, Hon. Melba Acosta Febo, in her official capacity, as defendants, in the Court of First Instance of Puerto Rico (the “Court of First Instance”) seeking a declaratory judgment that the Closing Agreement dated March 26, 2012 (the “Closing Agreement”) between Doral and the Treasury Department is a valid agreement, that it remains binding and effective, and that Doral is owed $229 million. Doral also filed a Writ for Certification in the Supreme Court of Puerto Rico (the “Supreme Court”) requesting the Supreme Court take Doral’s case for immediate review. On June 6, 2014, the Supreme Court ordered that the Court of First Instance hear the case on an expedited basis. On June 16, 2014, the Court of First Instance issued a ruling holding, in part, that it lacks jurisdiction to determine whether the tax payments at issue under the Closing Agreement were made by Doral during the periods in question and whether Doral is entitled to a refund, and providing the Treasury Department five days to offer a proper legal basis upon which to annul the Closing Agreement.

Also as previously disclosed, on June 18, 2014, Doral filed for a Writ for Certification in the Supreme Court requesting that the Supreme Court review the determination by the Court of First Instance that it lacks jurisdiction. On June 20, 2014, the Supreme Court declined to review the case but ordered the Court of Appeals of Puerto Rico (the “Court of Appeals”) to determine the jurisdictional issue by June 26, 2014. On June 26, 2014, the Court of Appeals requested an extension from the Supreme Court until July 1, 2014 to resolve the jurisdictional issue. The extension request was notified to the parties on June 27, 2014. On July 1, 2014, the Court of Appeals reversed the Court of First Instance, ruling that the Court of First Instance has in fact jurisdiction to determine the controversy. The Court of Appeals ruled that only a Court of Law and not the Treasury Department has jurisdiction to declare whether a binding and final Closing Agreement should be declared null and void. To that end, the Court of Appeals determined that the Treasury Department will have the burden to prove in an evidentiary hearing the reasons why it believes the Closing Agreement between the parties should be declared null and void.

The Court of Appeals nonetheless ruled that it lacked authority to expedite the mandate to the Court of First Instance and therefore Doral would have to wait until the judgment became final before the case would be remanded. Doral filed a Writ of Certiorari to the Supreme Court questioning only this particular aspect of the Court of Appeals ruling.

On July 22, 2014, the Supreme Court revoked the Court of Appeals ruling in favor of Doral expediting the mandate and remanding the case to the Court of First Instance to be continued immediately. The Supreme Court, for a third time, recognized the important public interest and urgency of this case and ordered the Court of First Instance to act diligently and immediately. The Supreme Court’s ruling does not alter the earlier determination by the Court of Appeals that, in order to annul the Closing Agreement, the Treasury Department has the burden to prove in an evidentiary hearing fraud, malfeasance or misstatement of material fact on the part of Doral.


Shire plc (SHPG) Enters Licensing Agreement for AGT-182 Jul 23, 2014 07:07AM

Shire plc (Nasdaq: SHPG) announced a worldwide licensing and collaboration agreement for AGT-182, an investigational enzyme replacement therapy (ERT) for the potential treatment of both the central nervous system (CNS) and somatic manifestations in patients with Hunter syndrome (MPS II). This collaboration strengthens Shire's rare disease pipeline of innovative therapies where there is high unmet need, and underscores the company's long standing commitment to the Hunter syndrome community.

Under the terms of the agreement, Shire will obtain worldwide commercialization rights for AGT-182 in exchange for payments of approximately $225 million to ArmaGen, including an initial upfront payment of $15 million in cash and equity, an additional equity investment, R&D funding, development milestones and sales milestones, in addition to royalty payments. As part of the agreement, ArmaGen will be responsible for conducting and completing the Phase I/II study which it expects to initiate before the end of 2014, after which point Shire will be responsible for further clinical development, including Phase III trials, and commercialization.

Dr. Philip J. Vickers, Global Head of Research and Development at Shire, said, "Our agreement with ArmaGen marks our continued promise to the Hunter syndrome community to bring novel therapies that have the potential to dramatically redefine the treatment paradigm and address the most critical unmet needs. AGT-182 has the potential to be an important new therapy to our portfolio of programs for the treatment of both the CNS and somatic manifestations of Hunter syndrome. We look forward to collaborating with ArmaGen and leveraging our ability to successfully develop medicines to treat this rare, life-threatening disease."

Shire researched, developed and commercialized the first treatment approved for Hunter syndrome. This agreement with ArmaGen expands Shire's commitment to finding treatments for Hunter syndrome, which also includes SHP-609, Shire's product currently being investigated to treat the CNS manifestations associated with Hunter syndrome.

James Callaway, Ph.D., Chief Executive Officer of ArmaGen said, "Shire is the ideal partner for AGT-182, based on the company's international reach and expertise in serving patients with Hunter syndrome. We look forward to beginning the Phase I/II clinical trial of AGT-182 in collaboration with Shire and leveraging their expertise with these patients."


Unwired Planet (UPIP) SuesMicrosoft (MSFT) Over Breach of Contract, Declaration Judgment Jul 22, 2014 04:55PM

Unwired Planet (Nasdaq: UPIP) announced that it has sued Microsoft (Nasdaq: MSFT) for breach of contract and declaratory judgment in the U.S. District Court of Delaware.

This action relates to the licensing agreement the two companies entered into in September 2011.

“Microsoft owes Unwired Planet licensing fees under a previous agreement,” stated Phil Vachon, chairman of Unwired Planet. “According to published reports, Microsoft collects two billion dollars of royalties each and every year for its intellectual property, but they seem unable to locate the funds to pay for ours. We expect to prevail in this matter."

The complaint was filed under seal in order to protect the confidentiality of certain terms of the parties’ agreement.


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