The SEC has reopened the comment period for its proposal to amend the disclosure and registration requirements applicable to asset-backed securities (“ABS”) in order for interested parties to comment on a new approach for the dissemination of potentially sensitive asset-level data.
In 2010, as part of what the industry referred to as Regulation AB II, the SEC proposed to require ABS issuers to file standardized asset-level information on EDGAR in prospectuses and, on an ongoing basis, in periodic reports. Although the SEC noted that requirements to disclose credit scores, income, debt and other information could raise privacy concerns, the SEC also noted that such information would permit investors to perform better risk and return analyses of the underlying assets and, therefore, of the ABS.
The proposals were re-proposed in July 2011 and comments were received in 2012. Commenters expressed a wide range of privacy concerns. In response, the SEC issued a new proposal that would require issuers to make asset-level information available to investors and potential investors through a website that would allow issuers to restrict access to information to ensure the security of sensitive information. The SEC is reopening the comment period to solicit comments on this latest proposal.
Comments must be submitted by March 28, 2014.
Commissioner Piwowar issued a statement of support regarding the SEC’s decision to reopen the comment period. He explained that market practices have evolved substantially since the original proposals were first published in 2011, making it necessary for the SEC to obtain more recent data. Specifically, Commissioner Piwowar requested that interested parties comment on (i) whether asset-level data is, in fact, necessary for investors to independently perform due diligence on Auto ABS and other types of non-MBS offerings; and (ii) whether market participants understand their obligations under the described approach to handle sensitive asset-level data. Additionally, he requested comment on any associated quantitative or qualitative benefits and costs to the markets as they exist today.