Alert December 13, 2011

SEC Extends Comment Period for Proposal Regarding Conflicts of Interest for Certain Securitizations

The SEC extended until January 13, 2012 the comment period on a rule proposal designed to implement Section 621 of the Dodd-Frank Act (the “ABS Conflicts Proposal”).  In broad terms, Section 621 prohibits an underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity, of an asset-backed security (“ABS”), whether or not registered and including a synthetic ABS, from engaging in a transaction that would involve or result in certain material conflicts of interest.  The ABS Conflicts Proposal was briefly discussed in the September 27, 2011 Financial Services Alert.  

The SEC has extended the comment deadline (originally December 19, 2011) to give the public a better opportunity to consider any potential interplay between the ABS Conflicts Proposal and the more recent Volcker Rule proposal issued by the FRB, OCC, FDIC and SEC (discussed in the October 20, 2011 Financial Services Alert).  The comment period for the Volcker Rule proposal closes on January 13, 2012; the SEC would consider a further extension of the ABS Conflicts Proposal comment period if the Volcker Rule proposal comment period is extended beyond January 13, 2012.