- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Aaron Nicodemus2023-01-25T20:18:00
The Securities and Exchange Commission (SEC) resurrected an unfulfilled mandate of the Dodd-Frank Act that would prevent the sale of certain securities if there is a conflict of interest.
The proposed rule, revisited for the first time after initially being put forward in 2011, would prohibit securitization participants like underwriters, placement agents, initial purchasers, or sponsors of an asset-backed security, as well as their affiliates and subsidiaries, from engaging in any transaction that would involve or result in a material conflict of interest between the securitization participant and an investor in such an ABS.
“Prohibited transactions would include, for example, a short sale of the ABS or the purchase of a credit default swap or other credit derivative that entitles the securitization participant to receive payments upon the occurrence of specified credit events in respect of the ABS,” the SEC said in a fact sheet accompanying Wednesday’s proposal.
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