SEC Proposes Rule on ABS; Issues Interim Temp Final Rule, Proposal on Swaps

The SEC voted yesterday to release a proposal implementing a section of the Dodd-Frank Act, which requires an issuer of Asset-Backed Securities (ABS) to perform a review of the assets underlying the ABS, to disclose information relating to the review, and to make publicly available the findings and conclusions of any third-party due diligence report. See the SEC’s press release: SEC Proposes Rule on Issuer Review [and related disclosures] of Assets Underlying Asset- Backed Securities. One of the first to report on this action yesterday was Jesse Westbrook of Bloomberg Business Week.

Last week, the SEC issued a press release announcing the publication of a separate rule proposal relating to ABS. (See October 6 proposed rule on ABS Representations and Warranties.) The proposal would require issuers of ABS — and credit rating agencies (NRSROS) that rate ABS — to provide investors with new disclosures about representations, warranties, and enforcement mechanisms. The comment deadline on the October 6 rule proposal is November 15.

Dave Lynn wrote about the October 6 ABS proposal in a post in TheCorporateCounsel.net blog last week, under the subheading: The Dodd-Frank Rulemaking Train Keeps Rolling: Now, Asset-Backed Securities.

Swaps
In other action at the October 13 open commission meeting, the SEC (1) voted to adopt an interim final temporary rule implementing a section of the Dodd-Frank Act, to provide for the reporting of certain security-based swap transactions and include an interpretive note regarding retention and recordkeeping requirements for certain security-based swap transactions, and (2) voted to propose Regulation MC to implement Section 765 of the Dodd-Frank Act, aimed at mitigating conflicts of interest at security-based swap clearing agencies, security-based swap execution facilities, and national security exchanges that post or make available for trading security-based swaps. See the SEC’s press releases: SEC Adopts Interim Rule To Require Reporting of Security Based Swaps, and SEC Proposes Rules to Mitigate Conflict of Interest in Security Based Swaps. One of the first to report on this action yesterday was Ronald D. Oral of WSJ Marketwatch.

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