SEC Conflicts of Interest Rule Commissioners Statements

Chair Gary Gensler’s statement on January 25, 2023, supports the SEC’s re-proposed rule to prohibit market participants in asset-backed securities from engaging in conflicting transactions, fulfilling Congress’s mandate to address conflicts that contributed to the 2008 financial crisis, as outlined in Section 621 of the Dodd-Frank Act.

Commissioner Hester M. Peirce supports issuing a new proposal to comply with Congress’s longstanding mandate but raises numerous concerns about its content, emphasizing the need for careful design to avoid harming the securitization and credit markets.

Commissioner Mark T. Uyeda expresses concerns about the balance struck in the January 25, 2023 rule proposal on conflicts of interest in securitizations, emphasizing the importance of public feedback to refine the rule’s impact on investor protection and market participation.

Commissioner Jaime Lizárraga supports the SEC’s re-proposal of the Dodd-Frank Act rule on January 25, 2023, aiming to address conflicts of interest in the asset-backed securities market, emphasizing its critical role in preventing another financial crisis and ensuring market integrity through enhanced transparency and investor protection.

Commissioner Caroline A. Crenshaw supports the SEC’s re-proposal on January 25, 2023, to implement Section 621 of the Dodd-Frank Act, aiming to prevent conflicts of interest in asset-backed securities that could harm investors, emphasizing the importance of clear definitions and effective exceptions such as hedging and market-making to ensure the rule’s practical effectiveness and alignment with statutory goals.

Chair Gary Gensler announced a new SEC rule prohibiting market participants from taking positions against asset-backed securities they help issue, fulfilling Congress’s mandate following the 2008 financial crisis. The rule includes exceptions for risk-mitigating hedging and market-making activities to safeguard investor interests in ABS transactions.

Commissioner Hester M. Peirce expressed dissent regarding the adoption of a new SEC rule aimed at prohibiting conflicts of interest in securitizations. She criticized the rule for its lingering ambiguities and broad scope, suggesting that further public comment on the revised approach is necessary to ensure effectiveness without hindering market activities like hedging and market-making. Peirce highlighted concerns about the rule’s potential overreach and its impact on the securitization market, advocating for a more targeted approach aligned with congressional intent.

Commissioner Mark T. Uyeda announced the adoption of Rule 192, implementing Section 621 of the Dodd-Frank Act to prevent conflicts of interest in securitizations. The rule addresses concerns raised during public comment by clarifying definitions and expanding exceptions for activities like hedging and foreign transactions, aiming to balance investor protection with market functionality. Uyeda emphasized ongoing monitoring and potential adjustments to ensure compliance feasibility for affected institutions, acknowledging the complexity and importance of this regulatory framework.

Commissioner Jaime Lizárraga announced the adoption of a new SEC rule aimed at preventing conflicts of interest in asset-backed securities (ABS) markets, mandated by the Dodd-Frank Act following the 2008 financial crisis. The rule prohibits certain market participants from engaging in transactions that could create conflicts detrimental to ABS investors, aiming to enhance market integrity and investor confidence. Lizárraga highlighted the rule’s provisions to clarify permissible activities like hedging and administrative functions, ensuring that long-term investors are protected while promoting the stability and efficiency of ABS markets.