Securitization Lobby in Disarray After Most Directors Quit

The main trade association for the securitization industry is in turmoil after most of the board resigned in a dispute with the group’s executive director over governance and bonuses, according to six people with knowledge of the matter.

The exodus at the American Securitization Forum puts the future of the group in question, said the people, who spoke on condition of anonymity because the dispute isn’t public. Members that quit include Bank of America Corp., JPMorgan Chase & Co., Deutsche Bank AG, Citigroup Inc. and law firm Cadwalader, Wickersham & Taft LLP, the people said.

The resignations came after the board attempted to remove the forum’s executive director, Tom Deutsch, but was unable to fire him because of the way the association’s governing documents are written, said the people. Part of the dispute concerns bonuses that Deutsch was paid, the people added.

Deutsch, who joined the group’s staff in 2004 after working as a lawyer at Cadwalader, issued a statement saying, “We remain focused on the advocacy and educational needs of all of the interests in the structured finance industry.”

While the statement didn’t directly address the mass resignations, Deutsch said negotiations over the association’s separation several years ago from the Securities Industry and Financial Markets Association have been “messier and more difficult than expected.”

Other Firms

Other firms that have left the group or pulled their employees off the board included Amherst Securities Group LP, Fitch Ratings Ltd., Moody’s Investors Service and Natixis SA, the people said. Ralph Daloisio of Natixis was the chairman of the ASF board; he didn’t return calls seeking comment.

Zia Ahmed, a spokesman for Bank of America, confirmed that the bank quit the forum, declining to comment further. Sean Dobson, head of Amherst Securities, left the board “due to concerns around transparency and governance,” said Tom Johnson, a spokesman for the bond broker. Spokesmen for other board members either declined to comment, didn’t respond to messages, or couldn’t be reached.

The ASF, based in New York, lobbies and holds conferences for the industry, which packages loans and leases into securities. Last year, securitization produced more than $500 billion of new bonds globally.

In testimony to Congress last year, Deutsch said the forum had 330 members. According to the group’s website, members include issuers, investors, financial intermediaries, rating companies, legal and accounting firms, trustees and servicers.

Lavish Conferences

The group is known for hosting a lavish annual meeting that has returned to Las Vegas after moving to less glitzy locations after the 2008 financial crisis. It took place in January at the Aria Hotel and Convention Center, home to Cirque du Soleil’s show “Zarkana.” Attendance totaled more than 5,300, Deutsch said at the time.

The ASF makes much of its money through conferences, said the people familiar with the matter. In Las Vegas this year, members paid as much as $1,810 to attend when registering on site, while costs for non-members were up to $2,560, according to the ASF website.

Sifma Split

The association was founded in 2002 as part of Sifma, Wall Street’s biggest lobbying group. In 2010, it split off from Sifma -- a contentious divorce, during which Deutsch was allowed to set up the ASF as a separate entity with himself as the sole member and director of the new organization, one of the people said.

That governing structure was supposed to be temporary though it persists, and a committee established to negotiate with Deutsch has made little headway on a new arrangement, the person said.

Deutsch faced an earlier round of defections last year over governance complaints highlighted in a letter of resignation to the board from Vernon Wright, its first chairman. Directors weren’t permitted to review some financial information, including staff pay, and had no legal control over the group, wrote Wright, an ASF founder who was chief financial officer of credit-card issuer MBNA Corp.

The “corporate-governance concerns lead me to the conclusion that the executive director is not being properly supervised,” he wrote.

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