The Securities and Exchange Commission (SEC) has issued a proposal to enhance disclosure to investors in the asset-backed securities (ABS) market.
The SEC's proposed rules require issuers of ABS to perform a review of the assets underlying the securities and publicly disclose information relating to the review. The proposal also requires an issuer or underwriter of ABS to make publicly available the findings and conclusions of any third-party due-diligence report.
"This marks the third commission proposal to address the ABS issues that came to light during the financial crisis," says SEC Chairwoman Mary L. Schapiro. "This proposal will require issuers to provide investors with better information about the loans backing the asset-backed securities."
The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the SEC to adopt rules regarding the review of assets, such as loans, underlying the securities no later than 180 days after enactment.
The proposed rules can be viewed here.