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Commission Proposes Rules on Asset-Backed Securities

At yesterday's open meeting of the SEC, the Commission approve the proposal of rules and rule amendments governing asset-backed securities. According to SEC Chair, Mary L. Schapiro:

The rules we are proposing stem from lessons learned during the financial crisis . . . These rules if adopted would revise the regulatory regime for asset-backed securities in order to better protect investors.

The proposals would:

  • Revise the filing deadlines for offerings of asset-backed securities;
  • Repeal the current credit ratings references in shelf eligibility criteria for asset-backed issuers;
  • Establish new shelf eligibility criteria that would include, among other things, a requirement that the sponsor retain a portion of each tranche of the securities that are sold and a requirement that the issuer undertake to file Exchange Act reports on an ongoing basis so long as its public securities are outstanding;
  • Require that, with some exceptions, prospectuses for public offerings of asset-backed securities and ongoing Exchange Act reports contain, in interactive data format, specified asset-level information about each of the assets in the pool; and
  • Create new information requirements for the safe harbors for exempt offerings and resales of asset-backed securities.

The full text of the asset-backed securities proposing rule release is available at: http://www.sec.gov/rules/proposed/2010/33-9117.pdf