Securitizations and the Dodd-Frank Act

Securitizations and the Dodd-Frank Act

By Howard M. Goldwasser Esq., Llyod H. Johnson Esq. and Drew A. Malakoff Esq.

Standards and Disclosure for Due Diligence for Registered Securitizations under Section 943 of the Dodd-Frank Act.


On January 20, 2011, the Securities and Exchange Commission (the "SEC") published a final rule under the Securities Act of 1933 (the "Securities Act") to set requirements for due diligence procedures and disclosure in asset-backed securities offerings.[1] This rule is designed to implement Section 943 of the Dodd-Frank Act.

The new rule, Securities Act Rule 193 ("Rule 193"), requires issuers of publicly offered asset-backed securities ("ABS") to "perform a review of the pool assets underlying the asset-backed security." In conjunction with Rule 193, the SEC has amended Item 1111 of Regulation AB ("Item 1111") to require that issuers also disclose the nature of the review of the assets, the "findings and conclusions" of the review and information regarding the amount and characteristics of assets that deviate from the underwriting criteria.

The Final Rule is effective as of March 28, 2011, but only registered offerings of ABS commencing with an initial bona fide offer after December 31, 2011 must comply with the Final Rule.

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This Emerging Issues Analysis was authored by attorneys at K&L Gates LLP.

All authors are attorneys at K&L Gates LLP.

Howard M. Goldwasser is a partner in the firm's New York office. He has more than 18 years of experience advising major U.S. and European investment and commercial banks, hedge funds and private equity funds, investment managers, and investors.

Llyod H. Johnson and Drew A. Malakoff are associates at K&L Gates LLP.