Alert January 03, 2012

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

The SEC further extended until February 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 had previously extended the comment deadline 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 19, 2011 Financial Services Alert).  The current extension is in response to the extension of the comment period on the Volcker Rule proposal until February 13, 2012.