Effective Date Set for Rule Barring Conflicted "Securitization Participants" from ABS Transactions

The SEC set an effective date of February 5, 2024 for its final rule prohibiting an asset-backed "securitization participant" from engaging in any transaction that could involve or result in a material conflict of interest. The final rule was published in the Federal Register.

As previously covered, the final rule will implement Securities Act Section 27B("Conflicts of interest relating to certain securitizations") and will apply to any underwriter, placement agent, initial purchaser or sponsor of an asset backed security ("ABS"), as well as to certain affiliates or subsidiaries of these entities.