Seth Grosshandler’s practice focuses on financial institutions, derivative products, securities transactions, secured transactions and structured finance.
As an instrumental player in the development of the “safe harbor” provisions of the Bankruptcy Code, the Federal Deposit Insurance Act and Orderly Liquidation Authority, Seth is regarded as a preeminent expert on risks to counterparties of regulated financial institutions in the event of the insolvency of the financial institution, as well as the rights of secured and unsecured creditors in insolvency proceedings to close-out, net and exercise remedies in derivative and securities transactions. During and after the financial crisis, he advised major Wall Street firms on their exposure to failing and failed counterparties, including Bear Stearns and Lehman Brothers, and various government agencies on market stabilization efforts.
Since then, Seth has participated in transatlantic regulatory reform initiatives, with a particular emphasis on legal mechanisms for resolving financial institutions. He is the co-chair (with Judge James Peck, who presided over the Lehman bankruptcy) of the American Bankruptcy Institute Advisory Committee on Financial Contracts, Derivatives and Safe Harbors, which will be issuing recommendations regarding amendments to the Bankruptcy Code (and possibly other insolvency laws) and safe harbors for qualified financial contracts. He has been actively engaged with both market participants and regulators on the development of rules to implement Orderly Liquidation Authority, innovative approaches to financial company insolvency such as “bail-ins,” and harmonizing U.S. and EU requirements for resolution plans (so-called “living wills”). Seth is advising several U.S. and non-U.S. institutions on the preparation of their resolution plans.
He has also been very involved in the move to cleared OTC derivatives – representing the Futures Industry Association in the creation of standard documentation for the relationship between futures commission merchants and their cleared OTC customers and the insolvency treatment of the FCMs’ rights, and the implementation of the CFTC’s “legally segregated operationally commingled” (LSOC) treatment of cleared OTC customer collateral. That work is an outgrowth of Seth’s representation of an ad hoc group of buy-side and sell-side market participants (with the participation and support of ISDA, SIFMA AMG and MFA), formed at the behest of the Federal Reserve Bank of New York to analyze cross-jurisdictional insolvency issues with respect to customer access to central CDS clearing platforms.
Seth joined the firm in 1983 and became a partner in 1992. He is resident in the firm’s New York office.