SEC Proposes Expansive Conflict of Interest Rules

October 04, 2011

The Securities and Exchange Commission recently voted unanimously to approve a notice of proposed rulemaking to implement the prohibition under Section 621 of the Dodd-Frank Act on material conflicts of interest. The proposed rule would prohibit certain ABS participants from engaging in transactions for one year following the initial closing of any sale of ABS that would involve a conflict of interest with its investors. However, the broadly worded rule has the potential to affect traditional securitization practices outside its intended scope. This update summarizes the proposed rule as presented in the notice.

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