Summary ABS issues are structured to avoid application of the Investment Company Act of 1940 ( 1940 Act ) Generally, absent an exception, most ABS issuers would be investment companies under the 1940 Act Subject to onerous substantive regulation disclosure requirements Investment Company Act § 3 Defines investment company Investment Company [more...]
ABS Registration Forms Form S-1 or Form S-3 Exclusive forms for registration of ABS Including foreign ABS Form S-1 can be used for any offering that meets definition of asset-backed security Form S-3 can be used if additional eligibility requirements are met Final release commentary Form S-3 eligibility requirements Must be [more...]
Exchange Act reporting for ABS issuers Summary SEC commentary Final release 33-8518 2005 Prior requirements Determining the Issuer Reporting on EDGAR Conditions for use Filing requirements Proposal release 33-8419 2004 Modified Form 10-K annual reports Most 10-K items are inapplicable Instead, specified Regulation AB items apply Final release [more...]
Summary Item 1114 requires disclosure about credit enhancement arrangements Internal arrangements such as subordination, overcollateralization, and excess spread External arrangements such as bond insurance, guarantees, liquidity facilities, and certain derivatives Compare Item 1115 SEC commentary Final release 33-8518 2005 General Forms [more...]
Summary Item 1115 requires disclosure about derivatives whose primary purpose is not to provide credit enhancement Such as interest rate swaps and currency swaps Compare Item 1114 Requires disclosure of selected financial data about each derivative counterparty with a "maximum probable exposure" amounting to 10% or more of the deal If [more...]
Summary Written materials such as term sheets and yield tables New SEC rules codify a series of no-action letters Simplify their use during the offering process SEC commentary Final release 33-8518 2005 Prior requirements Exemptive rule Definition of ABS Informational and Computational Material Conditions for use Filing requirements [more...]
Summary General provisions that apply to the rest of Regulation AB Specifies how information required by other items should be presented e.g., static loss and delinquency data or third party information Static pool data on losses and delinquencies Instructions on how to present historical data Specifies the use of 30- [more...]
Summary AB 1101 defines terms used in Regulation AB Asset-backed security - AB 1101(c) "Primarily serviced by the cash flows of a discrete pool of receivables or other financial assets" A key definition, as it defines the scope of Regulation AB Definition permits up to 50% prefunding For automobile leases, up to 65% of a deal [more...]
Summary Specifies the information that must be included on the front cover of an ABS prospectus Covers cover page of the prospectus, the prospectus summary and risk factors Final release commentary Forepart of registration statement and outside cover page of the prospectus Item [more...]
Sponsor defined AB Item 1101(l) Entity that organizes and initiates an ABS transaction By selling or transferring assets, either directly or indirectly, including through an affiliate, to the issuing entity Where there is not an intermediate transfer of assets from the sponsor to the issuing entity, the sponsor is the depositor SEC commentary [more...]
Issuing entity defined AB Item 1101(f) Special purpose entity created by a sponsor to hold pool assets and to issue ABS SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Regulation AB Item 1107 Item 1107(a) Identify issuing entities 1107(b) Describe [more...]
Servicer defined AB Item 1101(j) Responsible for the management or collection of the pool assets or making allocations or distributions to ABS holders SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Summary Item 1108 requires a discussion of the servicer's servicing experience Including for assets of the [more...]
Trustee defined ABS transaction may involve one or more trustees e.g., a separate trustee for the issuing entity and for the ABS indenture No express SEC definition SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Regulation AB Item 1109 Item 1109(a) Identify trustees 1109(b) [more...]
Originator defined When pool assets are not originated by the sponsor may have been acquired from a separate "originator" or through one or more intermediaries in the secondary market No express SEC definition Disclosures required if any originator sources more than specified thresholds of the pool assets SEC commentary Final [more...]
Significant obligors defined AB Item 1101(k) An obligor that, together with its affiliates, accounts for 10% or more of the pool assets backing the ABS Additional disclosures are required e.g., mortgagees, lessees SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Significant obligors of pool assets [more...]
Summary AB Item 1116 requires disclosure about the tax treatment of ABS: Material tax consequences to investors Federal tax treatment of the transaction "Identification of the material tax consequences upon which counsel has not been asked, or is unable, to opine" SEC commentary Final release 33-8518 2005 Proposal release 33-8419 [more...]
Summary AB Item 1117 requires disclosure about material legal proceedings Against the sponsor, depositor, trustee, issuing entity, servicer, or originator SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Regulation AB Item 1117 Item 1117 Legal proceedings [more...]
Summary Item 1118 requires a description of the monthly reports to investors Content of the reports is not specified in Item 1118 But rather in the instructions to Forms 10-D, 10-K, and 8-K Those forms, in turn, refer back to other Items of Regulation AB SEC commentary Final release 33-8518 ( 2005 Proposal release 33-8419 2004 [more...]
Affiliations and certain relationships and related transactions Summary Item 1119 requires requires disclosure about affiliations among parties to an ABS transaction e.g., among the sponsor, a servicer, and an enhancement provider Non-arm's length transactions among transaction parties during the past two years SEC commentary Final [more...]
Summary Item 1120 requires requires disclosure of credit ratings Including whether a rating will be monitored over security's lifetime See Rating Agencies SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Regulation AB Item 1120 Item 1120 Specified information Disclosure items [more...]
Summary Instructions for filing Form 10-D AB monthly distribution reports Must be filed within 15 days after each required distribution date Form 10-D can be signed either by the depositor or on behalf of the issuing entity by an authorized representative of the servicer Requires disclosure of "[a]ny material modifications, extensions or waivers to [more...]
Summary AB Items 1122 and 1123 Per Item 1123 authorized officer of each servicer that services 10% or more of a deal's assets to certify that he has reviewed his company's servicing performance and that his company has fulfilled its servicing obligations during the year If a company has not fulfilled its servicing obligations, the statement must [more...]
Summary SEC revises how its rules apply to asset-backed securities ( ABS ) Per Final Release 33-8518 Dec 2004 SEC summary SEC summary 12.01.05 Background on ABS Changes made to Securities Act registration practices Revises definition of asset-backed security Requires use of either Form S-1 or Form S-3 for all ABS registered offerings Adopts [more...]
Summary No distinction is made for foreign ABS under new SEC rules thus, foreign ABS must be registered on Form S-1 or S-3 can file a shelf registration without need to first establish a "track record" SEC commentary Final release 33-8518 2005 Proposal release 33-8419 2004 Regulation AB 1100(e) Subject to same disclosure [more...]
Pool assets defined SEC adopted general principles for describing pool assets instead of detailed industry guides for differing asset types provides sample lists as guidance must tailor disclosures to fit the particular asset pool If there is a prefunding or revolving period, must disclose: maximum amount of additional assets that may be [more...]
Summary A principles-based set of disclosure items tailored specifically to asset-backed securities ABS A subpart of Regulation S-K The "1100 series" Regulation AB items key to the disclosure requirements in the SEC's ABS registration statements and forms Similar to the integrated disclosure system applicable to [more...]
Lawyer Links Hyperlinked Version SEC Website PDF Summary Modified Form S-3 disclosure Specified Regulation AB items are also required Per S-3 General Instruction V Final release commentary III.A.3.a. , Gen Instr V Modified signature requirements Final release commentary III.A.3.d Modified Form S-3 [more...]
Summary Static pool data are measures of how groups of assets, such as those originated at different intervals, perform over time Facilitates detection of trends in the performance of pool assets that may not be evident from aggregate data Particularly for factors such as losses, delinquencies, and prepayments that can change or [more...]
Summary S-K Item 202 core disclosure requirement for describing the securities being offered AB Item 1113 requires disclosure of a transaction's structure terms of the securities distributions cash-flows within the transaction's structure credit enhancement mechanisms other features allocation of voting rights among [more...]