With reforms stemming from the Dodd-Frank Act in the U.S. and regulation in Europe and Asia Pacific growing nearer, Cadwalader, Wickersham & Taft’s deep regulatory knowledge base and expertise in commodity, equity structured products, credit derivatives and fixed income set itself apart from its competitors over the last year. That helped the firm land the 2012 Law Firm of the Year from the editors of Derivatives Week/Derivatives Intelligence.
One of the firm’s notable achievements over the last year was its role in assisting UBS with the issuance of a two-times leveraged certificate on the Russell 1000 Growth Index for an investment management client in the U.S. The client wanted exposure to the index through swaps, but had issues in terms of putting these swaps into all its own client accounts in this format.
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“The hardest aspect of the note was the complex notional reduction reset. When the S&P index goes down by a certain amount, leverage has to be reset. The most interesting thing about this from a legal perspective is that as the S&P continues to go down, there are multiple iterative resets,” said Ray Shirazi, partner at Cadwalader in New York. The structured notes, which entailed Securities and Exchange Commission filings across eight custodians, were allocated to the client’s accounts in less than a week with Cadwalader’s assistance. The creation of the notes, which were booked for nearly USD1 billion, also involved t analysis from the law firm since benefit plans, among others, needed to ensure compliance with the Employee Retirement Income Security Act.
“Equity structured products is our business focus. We know the ins and outs, strengths and weaknesses and what the market requires and wants. Other shops may handle them as an outgrowth of their corporate finance department or as a hybrid between two departments--but none focus on them as we do,” said Shirazi.
The firm has also been playing a pivotal role in the industry’s response to U.S. regulation, working with the International Swaps and Derivatives Association on redrafting Master Agreements to become compliant with Dodd-Frank regulation. “It is a master amendment, if you will, to all the ISDA master agreements out there, designed to comply with the covered rules of Dodd-Frank in an efficient manner, acceptable to the industry and to counterparties,” Shirazi said.
Cadwalader is also working with a number of Asian banks on cross-border issues arising from the Dodd-Frank rules such as whether they will need to register with the CFTC as either swap dealers or major swap participants because of dealings with U.S. customers. It has also bolstered its capital markets practice in the region with the hires of several officials in Hong Kong, including Joseph Lee in corporate finance and securities transactions, David Neuville in equity and debt securities, and Jeffrey Maddox, who focuses on international equity and debt transactions.