Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, October 13, 2010

SEC Proposes Additional ABS Disclosures

The SEC issued a proposal to enhance disclosure to investors in the asset-backed securities market.  It would require issuers of asset-backed securities (ABS) to perform a review of the assets underlying the securities and publicly disclose information relating to the review. The proposal also requires an issuer or underwriter of ABS to make publicly available the findings and conclusions of any third-party due diligence report.

The SEC’s proposal seeks to enhance ABS disclosure in three ways:

  • Issuers of ABS that are registered with the SEC would be required to perform a review of the bundled assets that underlie the ABS.
  • Proposed amendments to Regulation AB would require an ABS issuer to disclose the nature, findings and conclusions of this review of assets.
  • The issuer or underwriter for both registered and unregistered ABS offerings would be required to disclose the findings and conclusions of any review performed by a third party that was hired to conduct such a review.

The proposal includes detailed requests for comment on whether the Commission should set a minimum review standard, including possible standards that could be included in a final rule.

Public comments on the proposed rules should be received by the Commission by November 15.

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