SEC Joins Other Federal Regulators in Approving Final Risk-Retention Rule for Securitization Transactions
21 November 2014SEC Update
On October 22, the SEC joined with five other federal agencies (the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, and the Office of the Comptroller of the Currency) in approving a final rule that implements the risk-retention requirements of Section 941 of the Dodd-Frank Act. The final rule adopted by the joint regulators applies to securitization transactions that are privately placed, sold under Securities Act Rule 144A, or publicly offered if they involve asset-backed securities (ABS). A principal feature of the final rule is a requirement that sponsors of ABS retain at least 5% of the credit risk of the assets collateralizing the ABS, although there are exemptions from this requirement and others under the rule. The new rule is described in SEC Release No. 34-73407, which is available here.