SEC Grants Relief from Conflicts Rules for "Non-Deal Team" Securitization Participants

The staff of the SEC Division of Corporation Finance issued a no-action letter stating it will not recommend enforcement action for conflicts of interest for certain transactions entered into by "Non-Deal Team Employees" of securitization participants.

Under the staff position, a non-deal team employee may engage in a transaction otherwise prohibited under Securities Act Rule 192(a)(3)(iii) ("Conflicts of interest relating to certain securitizations") if the securitization participant has adopted written policies and procedures designed to prevent coordination with, and access to, Restricted Asset backed Security ("ABS") Information from, the ABS Deal Team. The relief also requires that non-deal team employees did not, in fact, coordinate with deal team personnel or receive such information, and that the activity was not part of a plan or scheme to evade the rule.