SEC Adopts Rules On ABS Transactions

Recently, the Securities and Exchange Commission voted to approve two sets of final rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) that seek to improve the market for asset-backed securities by enabling investors to better assess underwriting standards.

The first set of rules, implementing Section 943 of the Act, identifies and imposes new disclosure requirements on "securitizers" and imposes new disclosure requirements on nationally recognized statistical rating organizations (NRSRO). A securitizer is defined as either (A) an issuer of an asset-backed security or (B) a person who organizes and initiates an asset-backed securities transaction by selling or transferring assets, either directly or indirectly, including through an affiliate, to the issuer. The rules require securitizers to disclose their three-year demand, repurchase and replacement histories on the underlying assets in a tabular format on February 14, 2012 and,