[17764]
July 13, 2004
TO: FIXED-INCOME ADVISORY COMMITTEE No. 9-04
MONEY MARKET FUNDS ADVISORY COMMITTEE No. 10-04
SEC RULES MEMBERS No. 102-04
RE: INSTITUTE COMMENT LETTER ON REGULATION OF ASSET-BACKED SECURITIES
The Institute has filed a comment letter with the Securities and Exchange Commission
on proposed rules governing asset-backed securities (“ABS”).1 The proposed rules address the
registration, disclosure and reporting requirements for ABS under both the Securities Act of
1933 and the Securities Exchange Act of 1934. The most significant aspects of the comment
letter are summarized below and a copy of the letter is attached.
The Institute’s letter supports the proposed requirements for more ABS-tailored
disclosure in prospectuses. The letter recommends, however, that certain other items be added
to the required prospectus disclosure in order to ensure that investors are provided with the
information they need to make informed investment decisions. The letter recognizes that these
informational needs may vary based on the type of ABS offering and therefore supports the
principles-based approach of the proposed disclosure requirements.
The letter also generally supports the proposed rules’ approach to ongoing reporting.
The letter expresses concern, however, with the practice of ABS issuers ceasing to report under
the Exchange Act once they qualify for the automatic suspension under Section 15(d) of that
Act. The letter therefore recommends that the benefits of shelf registration afforded issuers
should be conditioned upon issuers agreeing to waive their right to suspend reporting under
Section 15(d).
Finally, the letter strongly opposes the proposal to codify existing staff positions under
Rule 15c2-8(b) under the Exchange Act that exclude broker-dealers, in connection with offerings
of ABS eligible for registration on Form S-3, from the requirement to deliver preliminary
prospectuses at least 48 hours prior to the sending of a confirmation. The letter also
recommends requiring the delivery of ABS informational and computational materials that
include additional information (as described in the letter) in a reasonable time frame, such as
two business days but not less than one business day, prior to effecting sales. The letter notes
that these recommendations, taken together, would address the current problems surrounding
the absence of material information at the time investment decisions are made.
1 SEC Release Nos. 33-8419; 34-49644 (May 3, 2004), 69 FR 26650 (May 13, 2004) (“Release”).
2
Jane G. Heinrichs
Assistant Counsel
Attachment (in .pdf format)
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attachment for memo 17764.