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October 14, 2022
Cadwalader submitted an amicus brief on behalf of the Structured Finance Association (“SFA”) in support of the National Collegiate Student Loan Trusts’ (the “Trusts”) appeal before the U.S. Court of Appeals for the Third Circuit. The Trusts have appealed the U.S. District Court for the District of Delaware’s denial of their motion to dismiss and have asked the Third Circuit to consider: (1) whether, under the Consumer Financial Protection Act (“CFPA”), the Trusts are “covered persons” subject to the CFPB enforcement authority; and (2) whether, after Collins v. Yellen, the CFPB was required to ratify the enforcement action before the three-year statute of limitations ran out. The outcome of this appeal has important implications for the securitization industry and any secondary market purchaser of a loan, including hedge funds and institutional investors (e.g., pension plans), with the possibility that all of them could become subject to the CFPB supervisory and enforcement jurisdiction to the extent such entities purchase consumer loans.
The amicus brief seeks to educate the Third Circuit on the complex mechanics behind the student loan securitizations, demonstrate how the legal standard adopted by the district court would harm investors and increase costs for consumers, and explain how the district court erred in its overly broad interpretation of “covered person” under the CFPA. The brief was prepared by Litigation partners Rachel Rodman and Ellen Holloman and associate Victor Celis, in collaboration with Capital Markets partners Sophie Cuthbertson and Neil Weidner and associate Hunter White.