Regulatory Alerts2023-02-14 | 2023-02003Added · Updated
Prohibition Against Conflicts of Interest in Certain Securitizations
The Securities and Exchange Commission proposes Rule 192 to implement Section 27B of the Dodd-Frank Act by prohibiting securitization participants from engaging in transactions involving material conflicts of interest with investors in asset-backed securities. The rule targets entities such as underwriters, sponsors, and their affiliates, banning activities like short sales or credit default swaps that bet against the performance of the securitized assets for one year after the initial sale. The proposal includes specific exceptions for risk-mitigating hedging, bona fide market-making, and liquidity commitments to distinguish permitted activities from speculative trading.
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