AIMA and ACC submit response to SEC proposed rule prohibiting conflicts of interest in securitisations

Published: 28 March 2023

On March 27, AIMA and the ACC submitted their response to the US Securities and Exchange Commission’s (SEC) Proposed Rule 192 - Prohibition Against Conflicts of Interest in Certain Securitizations.  In the comment letter, AIMA and the ACC highlighted problems surrounding:

  • Scope and definitions of securitization participants:  The broad scope of the proposed definitions will act as a disincentive to participating in the market and undermine the effectiveness of the securitization market in supporting the allocation of capital to the real economy.
  • Scope of the exceptions:  The lack of clarity and subjectivity regarding the scope of these exceptions undermines their workability and viability.
  • Scope of the prohibition:  The proposed prohibition lacks a clearly defined scope and contains a catch-all anti-circumvention provision that should be eliminated.
  • Definitions of material conflicts of interest or conflicted transactions:  The potentially-unworkable definition of a short sale of a relevant and the extremely broad description of a conflicted transaction will create uncertainty and likely lead to an inconsistent application of the provision by market participants.

For further information, please contact Guillermo Pérez Molina, Private Credit Associate.