On October 14, 2010, the SEC proposed asset-backed securities disclosure rules in accordance with Sections 932 and 945 of the Dodd-Frank Act. Under these proposals, the following requirements apply:

  • issuers of asset-backed securities that are registered with the SEC would need to perform a review of the assets underlying the asset-backed securities
  • proposed amendments to Regulation AB would require an issuer of asset-backed securities to disclose the nature, findings and conclusions of this review
  • the issuer or underwriter for both registered and unregistered asset-backed securities offerings would be required to disclose the findings and conclusions of any review performed by a third party that was hired to conduct such a review

Under the proposed rules, a third-party diligence provider whose findings and conclusions are included in a registration statement may be required to consent to being named in the registration statement as an expert and thus be subject to liability under Section 11 of the Securities Act.

The SEC is required to adopt rules under Sections 932 and 945 of the Dodd-Frank Act within 180 days after enactment of the Dodd-Frank Act. Comments are due on the rules by November 15, 2010.