Quandaries Facing Securitizers in the Wake of the SEC’s Proposed Amendments to Regulation AB

Abstract

The SEC announced its proposed Reg AB amendments (the “RegAB II”) dealing with the offering process, disclosure, and ongoing reporting of asset-backed securitizations on April 7, 2010. Since the comment period expired in August, the SEC has been evaluating comments it has received on its proposal, as well as working with other agencies, as required by the Dodd-Frank legislation, on various measures common to other agency proposals. Securitization participants should be on heightened awareness of the continuing development in the interagency rulemaking process. As currently written, the SEC’s proposed rules are designed to facilitate both investor and general public confidence in structured finance. This article considers the possibility of other consequences, including:

• • Will the proposals have an effect on the length of time it takes to bring a deal to market?

• • What is the effect, if any, of the proposed 5% risk retention requirement with respect to consolidation?

• • What might be the effect of RegAB II on the private placement market?

• • What are some of the considerations with respect to the proposed waterfall programming?