Tuesday, August 26, 2014

SEC Will Vote on New ABS and NRSRO Rules

[This story previously appeared in Securities Regulation Daily.]

By Jacquelyn Lumb

The SEC has scheduled an open meeting for Wednesday, August 27, at which it will consider the adoption of rules to revise the disclosure, reporting, and offering process for asset-backed securities (ABS). The new disclosure would include information about the assets underlying certain asset classes and would be presented in a standardized tagged format. The rules also would revise the shelf offering process and eligibility criteria for asset-backed securities.

The SEC originally proposed the ABS revisions on April 7, 2010, but the Dodd-Frank Act, enacted in July 2010, required the SEC to adopt a number of additional ABS-related rules. The SEC subsequently re-proposed a portion of its 2010 ABS release to seek comments on the asset-level disclosure provisions. In response to the re-proposal, a number of commenters raised concerns about the sensitivity of some of the asset-level disclosure and urged that it be provided in a manner other than through the public dissemination via EDGAR.

The staff prepared a memorandum summarizing another means of disseminating the asset-level information and reopened the comment period to gain views on the provision of the information to investors and potential investors through restricted access web sites. The comment period on the staff memorandum closed on April 28, 2014.

NRSRO rules. The SEC also will consider at the open meeting the adoption of amendments and rules to implement the Dodd-Frank Act provisions relating to nationally recognized statistical rating organizations (NRSRO), providers of third-party due diligence services for asset-backed securities, and issuers and underwriters of asset backed securities under the Exchange Act. The revisions were originally proposed in May 2011. The rules prescribe the format of a certification that third-party due diligence services would have to provide to each NRSRO that produces a credit rating for an ABS to which the due diligence services relate.

The rules would also implement the Dodd-Frank Act requirement for issuers and underwriters of ABS to make public the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter.