Securities Activities of Banks in the GLB Era - Cleary Gottlieb Steen ...

eview. “Higher risk transactions” could involve such
matters as:
(A) Questionable economic substance or business
purpose, or features designed primarily to
obtain a particular accounting or financial
disclosure treatment, or a particular accounting,
regulatory, legal or tax result.
(B) Concerns about how the client will report or
disclose the transaction.
(C) Terms inconsistent with market norms (e.g.,
“deep in the money” options, non-standard
settlement dates, non-standard forward-rate
rolls).
(D) Legal agreements that deviate from market
norms.
(E) Oral or undocumented agreements
(F) Multiple obligors, or multiple parts which are
not fully described in a single agreement or
offering document or which otherwise lack
transparency.
(G) Multiple geographic or regulatory jurisdictions.
(H) Unusual profits, losses or compensation that
appears disproportionate to the services
provided or to the risk assumed (e.g., where the
financial institution performs purely an
“accommodation” role, without contributing
economic substance to the transaction), or that
may raise “appropriateness” or “suitability”
considerations insofar as marketing to, or
selection of, counterparties is concerned.
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