RegulationAlert Papers

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Communications During the Offering Process
In a traditional ABS transaction process, before a final market plan is delivered to investors, term sheets and computational materials regarding the transaction are distributed. Brokers also publish research reports about ABS simultaneously with a newly registered, similar ABS. The SEC has targeted these practices with no-action letters and a specific rule concerning ABS informational and computational materials. The new definition, which encompasses all permissible varieties of materials, allows term sheets to refer to "static pool data," as described under the proposed rules for Disclosure, and states that this pool data concerns only assets that are similar to the newly registered assets, but are not the actual securitized assets themselves. This will highlight the historical performance of assets originated or purchased by an ABS sponsor during specific periods in the past, allowing investors to extrapolate the future potential of the new assets in an ABS offering. Many investors, especially those involved in MBS transactions, have requested the delivery of information pertaining to the originator's previous experience with mortgage loans prior to the issuance of a final prospectus.

The proposed rules also add to the definition that term sheets may reveal the identity of the issuer of an ABS offering, without the inclusion of identities of any other key parties involved. The rules also contend that term sheets are not permitted to include structural information normally included in structural term sheets, such as servicing terms, ratings, legal investment, tax and ERISA information.
Research Reports
The SEC proposes to establish a precedent where a broker's publications of research reports which concern a particular ABS type, while the broker is involved in an offering of a similar ABS, will not be viewed as an illegal offer of that ABS in which the broker is participating.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not intended, and should not be construed, as legal, accounting, or tax advice, or as an opinion provided (expressed or implied) by NDB LLP to the reader or any other person. This material may not be applicable to, or suitable for, the specific circumstances or needs, and may require consideration of legal, regulatory compliance, non-tax, or tax factors. Contact NDB LLP for engagement and a consultation prior to taking any action based upon this information or other marketing information. NDB LLP assumes no obligations to inform the reader of any changes in SEC legislation/regulations or tax laws or other factors that could affect the information contained herein.
Core Components of Regulation AB
The Securities and Exchange Commission's (SEC) Regulation AB federal securities rules and regulations consist of four primary areas affecting asset-backed securities: securities act registration, disclosure, communications during the offering process, and ongoing reporting under the exchange act.

Each of these four areas represents significant changes for asset-backed securities along with having a profound impact on the industry as a whole.