On May 18, pursuant to Section 932 of the Dodd-Frank Act, the SEC proposed rules for credit ratings, NRSROs, and third-party due diligence providers for ABS. NRSROs would be required to: (i) report on internal controls; (ii) protect against conflicts of interest; (iii) establish professional standards for credit analysts; (iv) publicly provide disclosure concerning specific credit ratings and the methodology used; and (v) enhance public disclosure on the performance of credit ratings. The proposed rules would also require a third-party due diligence provider to provide a public written certification to any NRSRO that rates the ABS. Comments must be submitted within 60 days after publication in the Federal Register. SEC Release. SEC Proposed Rule.
ABS
SEC Approves FINRA Amendments for ABS Reporting and Fee Rules
On May 10, the SEC approved proposed amendments to FINRA transaction reporting and notification requirements under FINRA Rule 6730 as well as to reporting fees under FINRA Rule 7730, relating to ABS and the method of calculating the Trading Activity Fee for such securities. These requirements will become effective on May 16. FINRA Notice.
SEC No Action Letter and Proposed Rule for Section 15(d)
On January 6, the SEC issued a no-action letter confirming that it would not recommend enforcement action if an ABS issuer continues to determine its reporting requirements for existing transactions based on the standards set forth in Section 15(d) of the Exchange Act prior to the enactment of the Dodd-Frank Act, if certain conditions are satisfied. This no-action relief applies to any issuer which had suspended its reporting requirements for outstanding ABS prior to enactment of the Dodd-Frank Act. Also on January 6, the SEC proposed a rule to permit suspension of the reporting obligations for ABS issuers when there are no longer ABS of a class sold in a registered transaction held by non-affiliates of the depositor and to amend rules relating to the Exchange Act reporting obligations of ABS issuers in light of these statutory changes. Comments must be received by February 7. SEC No Action Letter. Proposed Rule.
SEC Extends Ford Motor Credit “No Action” Letter
On November 23, the SEC extended indefinitely the Ford Motor Credit “no-action” letter allowing issuers of ABS to omit credit ratings from registration statements filed under Regulation AB. The “no-action” letter was originally issued on July 22 in response to the repeal of Rule 436(g) as a result of the Dodd-Frank Act, which subjects credit rating agencies to expert liability for ratings disclosure. SEC Updated No-Action Letter.