SEC Open Meeting, September 19, 2011

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Dodd-Frank Timeline, Prohibition Against Conflicts Of Interest In Certain Securitizations, SEC
Proposal Date Comment Deadline Final Rule Issue
September 2011 December 19, 2011 Early 2012

The U.S. Securities and Exchange Commission (SEC) held a public meeting on September 19, 2011 focused on the prohibition against conflicts of interest in certain securitizations under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule proposals concern those who package and sell asset-backed securities (ABS) and prohibits:

  • "Securitization participants — underwriters, placement agents, initial purchasers, sponsors, or any of their affiliates or subsidiaries ...
  • ... of an ABS — including a synthetic ABS ...
  • ... for a designated time period — ending on the date that is one year after the date of the first closing of the sale of the ABS ...
  • ... from engaging in certain transactions — including effecting a short sale of the securities offered in the ABS transaction or its underlying assets ...

Archived webcast:

Related Documents[edit]

Prohibition Against Conflicts Of Interest In Certain Securitizations

  • The proposed rule, Section 621 of Dodd-Frank, prohibits participants in asset-backed securities transactions from taking part in certain transactions that would create any material conflict of interest. The rules for determining such conflict of interest in a transaction are also included in the proposal.
Read proposed rule.png


Commissioner Luis A. Aguilar, whose statements include:

  • An explanation of the responsibilities held by participants in asset-backed securities transactions, and the abuse of power committed by some.

Commissioner Troy A. Paredes, whose statements include:

  • Support for the proposal.
  • General concerns including the risk of cutting off investors from investment opportunities and constraining the market.
  • Specific questions and concerns:
  1. "If the proposal were adopted, what would the likely impacts be on the securitization market, including investor protection, capital formation, and liquidity? On risk management?
  2. I am concerned that, as proposed, Rule 127B does not incorporate a role for disclosure. When a transaction or structure is banned, investors may find themselves forced to forego investment opportunities that they might welcome if given the opportunity to make an informed choice.
  3. New Section 27B of the Securities Act only prohibits material conflicts of interest that arise during a specified covered timeframe."

Chairman Mary L. Schapiro, whose statements include:

  • A summary of the proposed rule.
  • A reminder that the rule is not intended to interfere with the flow of the markets.
  • A mention that the discussion spurred by the proposed rule should be very similar to that following the Volcker Rule's proposal.<ref>Commission Speeches and Public Statements. SEC. Retrieved on September 19, 2011.</ref>



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