Omitted Reg. AB II Requirements May Still Be Under Active Consideration by SEC

According to some industry reports, the SEC is still actively considering the aspects of its Regulation AB II proposals that were not adopted but that remain outstanding. These reports also indicate that the SEC is informally seeking additional comments from industry participants.

Other reports are more muted, indicating only that some commission members occasionally ask questions of staff regarding these issues, including whether they think that the positions of major industry commenters on these issues may have changed.

The deferred proposals would, among other things:

• Give investors in any private offering of “structured finance products” made in reliance on Rule 144A under the Securities Act the right to obtain all of the same initial and ongoing information as if the offering were SEC-registered;
• Require general asset-level data disclosures in securitizations of all asset classes, impose specific asset-class requirements for equipment loans and leases, student loans and floorplan financings, and require grouped-account disclosure for credit and charge card ABS;
• Require that investors be provided with a computer program of the cash flow waterfall; and
• Require substantially final transaction documents to be filed by the date the preliminary prospectus is required to be filed.

Given the broad scope of the adopted provisions, in our view it would be somewhat surprising for the SEC to adopt any sweeping changes in the near future. Ordinarily, we would expect the SEC to remain in a “wait and see” mode during the implementation period in order to assess the effectiveness of the adopted rules before undertaking any significant new rulemaking.