The SEC Finally Adopts Regulation AB II

Abstract

Regulation AB II represents the response of the U.S. SEC to a public perception that inadequate regulation of offerings of asset-backed securities (ABS) was a significant driver of the credit crisis. The new rules, which revise Regulation AB and the other SEC regulations regarding offerings of ABS, were finally adopted in August 2014 and became effective November 1, 2014. There are several key aspects of Regulation AB II, but perhaps the most important will be the new asset-level data disclosure requirements. Other aspects include registration forms developed specifically for public offerings of ABS; a requirement for ABS shelf issuers to file a preliminary prospectus no more than three days before any securities are sold; enhanced static pool information and a graphical presentation of delinquencies, losses, and prepayments; an elimination of the SEC’s requirement that shelf-registered ABS be rated investment grade by at least one nationally recognized statistical rating organization (NRSRO); and a required certification signed by the depositors’ CEO at the time of each takedown.

TOPICS: Asset-backed securities (ABS), financial crises and financial market history