SEC Rule on Conflicts of Interest in ABS Transactions

On September 19, the SEC issued proposed Rule 127B, as required under Section 621of the Dodd-Frank Act, to prohibit material conflicts of interest in connection with ABS transactions. Under the proposed rule, entities that package and sell ABS would be prohibited from engaging in transactions that would involve or result in a material conflict of interest with respect to any investor in the ABS. The prohibition would end one year after the first closing date of the ABS sale. Comments to the proposed rule must be submitted by December 19. SEC Release. Proposed Rule.