Regulatory Alerts2023-12-07 | 2023-26430Added
Prohibition Against Conflicts of Interest in Certain Securitizations
The Securities and Exchange Commission adopted Rule 192 to implement Section 27B of the Securities Act, prohibiting securitization participants from engaging in transactions that create material conflicts of interest with investors in asset-backed securities. The rule bans activities such as short sales and credit default swaps related to the specific credit performance of an asset-backed security for a period ending one year after the first closing of the sale. Final provisions include exceptions for risk-mitigating hedging, liquidity commitments, and bona fide market-making, alongside an anti-evasion clause and a safe harbor for certain foreign transactions.
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