"SEC Proposes Rule to Implement 'Representation and Warranty' Provisions of Dodd-Frank"

On October 5, 2010, the Securities and Exchange Commission issued its first of several releases required by Congress to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to asset-backed securities ("ABS").  In this release, the SEC proposes rules that would: (1) require any "securitizer" to disclose fulfilled and unfulfilled repurchase requests, so that investors may identify asset originators with clear underwriting deficiencies, and (2) require each nationally recognized statistical rating organization to include in any report accompanying a credit rating with respect to ABS a description of: (a) the representations, warranties and enforcement mechanisms available to investors, and (b) how they differ from the representations, warranties and enforcement mechanisms in issuances of similar securities.

This Stroock Special Bulletin highlights the major provisions of the SEC's release.