SEC Releases Final Rule on Prohibiting Conflicts of Interest in Certain Securitizations

The SEC has released a final rule Prohibition Against Conflicts of Interest in Certain Securitizations, which adds Section 27B to the Securities Exchange Act of 1933 in response to a mandate of Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The final rule’s amendments are “intended to prevent the sale of asset-backed securities . . . that are tainted by material conflicts of interest.” Specifically, “an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security (including a synthetic asset-backed security), or certain affiliates or subsidiaries of any such entity, [is prohibited] from engaging in any transaction that would involve or result in certain material conflicts of interest.”

The final rule will become effective 60 days after the date of its publication in the Federal Register. For more information, see the press release and fact sheet — as well as the statements by SEC Chair Gary Gensler and Commissioners Mark Uyeda, Hester Peirce, and Jaime Lizárraga — on the SEC’s Web site.