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6.22 One Year Prohibition on Conflicts of Interest in Securitizations

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6.22 One Year Prohibition on Conflicts of Interest in Securitizations

 

 


6.22.    One Year Prohibition on Conflicts of Interest in Securitizations.  An underwriter, placement agent, initial purchaser, or sponsor, or any affiliate thereof, of an asset-backed security (including a synthetic asset-backed security) may not engage in any activities that would involve or result in conflicts of interest within a year after the first closing date. [§ 621]  This provision will not apply to (i) risk-mitigating or hedging activities, or (ii) purchases and sales consistent with liquidity obligations, and bona fide market-making in the asset backed security. [§ 621]

The SEC is required to adopt rules implementing the prohibition against conflicts of interest within 270 days after the enactment of the Act.  These rules and the statutory provision will be effective simultaneously.