(Bloomberg) -- JPMorgan Chase & Co. won a federal appeals court ruling that a $1.8 billion leveraged loan at issue in a court case was not a security, a win for the banking industry.
The decision Thursday by the US Court of Appeals in Manhattan came after the Securities and Exchange Commission declined in July to share its view on whether leveraged loans are securities, a development widely seen as making it less likely that the court would overturn the status quo.
The case involved a 2014 loan sale where the debt quickly soured. A trustee for investors in the debt, Marc Kirschner, said the Wall Street firms that offered the debt, including JPMorgan, withheld key information that would have tipped off investors about trouble at the company.
Leveraged loans are not considered securities under US law. Had the court ruled that the loan at issue in the case was a security, it could have have sweeping ramifications of leveraged debt markets and ushered in more regulation and disclosures.
©2023 Bloomberg L.P.
