Regulatory Alerts2011-09-28 | 2011-24404Added · Updated
Prohibition Against Conflicts of Interest in Certain Securitizations
The Securities and Exchange Commission proposes Rule 127B to implement Section 621 of the Dodd-Frank Act by prohibiting underwriters, sponsors, and affiliates from engaging in transactions creating material conflicts of interest with investors in asset-backed securities. This prohibition applies for one year following the first closing of the security's sale and covers both registered and unregistered offerings of asset-backed and synthetic asset-backed securities. The proposed rule provides exceptions for specific risk-mitigating hedging activities, liquidity commitments, and bona fide market-making to ensure the regulation does not unduly hinder legitimate market functions.
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