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Client Alert: New TARP Letter Dictates Quick Action

Today, the United States Department of the Treasury issued a press release announcing its intent to continue conducting auctions of securities held as part of the Capital Purchase Program of TARP.  The release specifically identifies 53 financial institutions’ CPP securities that Treasury is intending to  auction beginning in January.
Click here to view the press release.

Voting Securities

Of particular note, it appears as if many of the CPP securities intended to be auctioned either:

In each of these cases, the securities may be deemed to be voting or control securities by the federal banking regulators.  Treasury has indicated that possible bidders (including the financial institution itself, directors, designated bidders and institutional investors) must consult with the appropriate federal and state banking regulator prior to  the bidding in an auction and, if necessary, to receive formal approval or non-objection to purchase the amount of securities on which the bidder is interested in bidding.

Initial Action Items

Coordinating a bid with the banking regulators and Treasury will take some time and it is imperative that issuers and potential bidders begin the process immediately if they are interested in participating in the January auctions.  Potential bidders (including the named financial institutions that are planning to bid on their own CPP securities) should begin the process by:

Additionally, the named financial institutions (whether or not they will bid on their own CPP securities) and potential bidders should begin reviewing the necessary corporate documents (including the bidding documentation, placement agency agreement, form of legal opinion, etc.) that are required by Treasury to complete the auction.

Our Experience

Since Treasury began the auction process earlier this year, we have represented over 20 financial institutions and bidders in preparing for or proceeding through the auction process.  We have a number of attorneys who are experienced in the corporate, securities and bank regulatory aspects of the auction process.  Please contact one of our attorneys listed below if you have any questions on the auction process.


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