On September 19, the SEC issued proposed Rule 127B, as required under Section 621 of the Dodd-Frank Act, to prohibit material conflicts of interest in connection with certain securitizations. The proposed rule would prohibit certain persons who create and distribute an ABS, including a synthetic ABS, from engaging in transactions within one year after the date of the first closing of the sale of ABS that would involve or result in a material conflict of interest with respect to any investor. Please click here to access the proposed rule. The deadline for comments on the proposed rule is December 19.

Please click here to access our complete update, which includes an overview of the proposed rule and the SEC’s proposed interpretive framework regarding application of the proposed rule and its exceptions.