New SEC ABS Rules Require CEO Certification
The SEC has adopted new disclosure, reporting, and offering rules for asset-backed securities. The SEC will now require CEO certifications and compliance representations about the underlying assets rather than credit ratings. ABS issuers of paper backed by mortgages, auto loans, and debt securities must provide standardized information in the prospectus and ongoing reports about the underlying assets including credit quality, collateral, and cash flows. Additionally, the SEC created new disclosure forms specifically for ABS offerings (Forms SF-1 and SF-3), which include more disclosure about the transaction parties.
OUR TAKE: The CEO certification should trigger a move to enhanced due diligence of the underlying asset pool including the implementation of a compliance infrastructure.