15 U.S.C. § 77z–2a: Conflicts of interest…

Summary

Underwriters, placement agents, initial purchasers, sponsors, and their affiliates or subsidiaries for asset-backed securities (including synthetic ones) must not make any deals that create a major conflict of interest with investors for one year after the first closing of the sale. The Commission must write rules to put this in effect within 270 days after July 21, 2010. Allowed exceptions are hedging trades that only reduce the specific risks tied to those underwriting or sponsorship positions, purchases or sales made to meet a commitment to provide liquidity, and genuine market-making trades. This does not limit how section 78o–11 applies.

Title 15, §77z–2a

Commerce and Trade, Source: USLM XML via OLRC

(a)In general

An underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity, of an asset-backed security (as such term is defined in section 78c of this title, which for the purposes of this section shall include a synthetic asset-backed security), shall not, at any time for a period ending on the date that is one year after the date of the first closing of the sale of the asset-backed security, engage in any transaction that would involve or result in any material conflict of interest with respect to any investor in a transaction arising out of such activity.

(b)Rulemaking

Not later than 270 days after July 21, 2010, the Commission shall issue rules for the purpose of implementing subsection (a).

(c)Exception

The prohibitions of subsection (a) shall not apply to—

(1)risk-mitigating hedging activities in connection with positions or holdings arising out of the underwriting, placement, initial purchase, or sponsorship of an asset-backed security, provided that such activities are designed to reduce the specific risks to the underwriter, placement agent, initial purchaser, or sponsor associated with positions or holdings arising out of such underwriting, placement, initial purchase, or sponsorship; or

(2)purchases or sales of asset-backed securities made pursuant to and consistent with—

(A)commitments of the underwriter, placement agent, initial purchaser, or sponsor, or any affiliate or subsidiary of any such entity, to provide liquidity for the asset-backed security, or

(B)bona fide market-making in the asset backed security.

(d)Rule of construction

This subsection shall not otherwise limit the application of section 78o–11 of this title.

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 111–203, title VI, § 621(b), July 21, 2010, 124 Stat. 1632, provided that: “section 27B of the Securities Act of 1933 [15 U.S.C. 77z–2a], as added by this section, shall take effect on the

Effective Date

of final rules issued by the [Securities and Exchange] Commission under subsection (b) of such section 27B, except that subsections (b) and (d) of such section 27B shall take effect on the date of enactment of this Act [July 21, 2010].”

§77z–2a Conflicts of Interest Relating to Certain Securitizations

Summary

Title 15, §77z–2a

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Effective Date

Citations & Metadata