Kirschner v. JP Morgan: Syndicated Term Loans Are Not Securities, But What About Digital Assets?
Highlights
The Second Circuit’s ruling was a relief for many market participants in the trillion-dollar syndicated loan market
By affirming the test used in Reves, the Second Circuit recognized that notes are used in a variety of settings, with different purposes, and not all uses involve investment
It remains to be seen whether the Kirschner decision will impact the SEC’s attempts to regulate digital assets as securities. However, it seems unlikely that Howey will be displaced as the dominant standard by which digital assets and protocols will be analyzed by regulators and the courts
In a highly anticipated ruling, the U.S. Court of Appeals for the Second Circuit recently ruled in Kirschner v. JP Morgan Chase Bank, N.A., that broadly syndicated term loan Bs are not securities and that securities laws may not serve as the basis of claims against parties such as those responsible for marketing such loans to potential lenders.
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