TheCorporateCounsel.net

Last week, Corp Fin posted three new CDIs related to asset-backed securities. This Mayer Brown alert notes:

C&DI 103.01 SECURITIZATION PARTICIPANT – INFORMATION PUBLICLY AVAILABLE ON EDGAR

This C&DI provides guidance on when affiliates and subsidiaries may be considered “securitization participants” under Rule 192. Here, staff confirms that merely having access to, or receiving, information that is publicly available on EDGAR, by itself, does not result in the affiliate or subsidiary being a securitization participant under paragraph (ii)(B) of the “securitization participant” definition in Rule 192(c). This is consistent with prior public statements made by SEC staff. For more insight into Rule 192, please see Conflict Resolution: The SEC Adopts Final Rule 192 (Conflicts of Interest in Securitization Transactions).

C&DI 112.01 FORM ELIGIBILITY FOR PUBLIC UTILITY SECURITIZATIONS

This C&DI provides guidance on the proper registration statement forms for offering of securities that are backed by securitization property which includes the right to assess and collect certain special charges on customers’ public utility bills (“public utility securitizations”). Here, staff confirms that (1) Form SF-1 is the proper registration statement form and (2) Form 10-K, Form 8-K, and Form 10-D are the appropriate forms for periodic reporting for public utility securitizations regardless of whether they are structured as stand-alone trusts or “series trusts” (where multiple series of unrelated securities are issued by a single issuing entity). Staff also states that, because public utility securitizations structured as series trusts are Exchange Act ABS, series trust issuers should refrain from making statements in their filings that they are not asset-backed issuers or that their securities are not asset-backed securities, as such statements would not be accurate.

C&DI 301.04 ITEM 1101(C) – SINGLE ASSET SECURITIZATIONS

This C&DI provides guidance that a security that is supported by the cash flow of a single asset satisfies the requirement in Item 1101(c)(1) of Regulation AB that an asset-backed security be primarily serviced by the cash flows of a discrete “pool” of receivables or other financial assets. Staff notes that the term “pool” in Item 1101(c)(1) of Regulation AB does not require more than one asset and instead refers to the general absence of active pool management. Issuers should note that this C&DI does not change the requirements of other rules and regulations, such as Rule 140 or Rule 190 under the Securities Act of 1933, or the disclosure requirements of Regulation AB, including, for example, Item 1112 (Significant obligors of pool assets).

I have not spent much time working with asset-backed securities in private practice, but I was in the Corp Fin office that handled asset-backed securities back in the 1990s, and I really enjoyed the “square peg, round hole” aspect of how we used the comment process and interpretations to create the disclosure regime for asset-backed securities in the time before Regulation AB was adopted as the comprehensive regulation framework for asset-backed securities offerings. I can distinctly remember being handed a stack of comments that we typically issued on asset-backed offerings and sent off to review a registration statement. There is nothing quite like learning by doing! In any event, we have certainly come a long way in the SEC’s approach to the unique aspects of this market.

– Dave Lynn