On December 13, 2011, the SEC issued a release announcing the extension of the comment period for its proposed rule under the Dodd-Frank Act prohibiting certain conflicts of interest in asset-backed securities (ABS) transactions. Proposed Rule 127B under the Securities Act would prohibit certain parties involved in the creation and distribution of ABS from engaging in any transaction that would create or result in a material conflict of interest with any investor in the ABS for one year after the date of the first closing of the sale of the securities. In particular, the SEC is seeking additional comments on the potential interplay between the proposed rule and the Volcker Rule (see Legal Update, Agencies Issue Proposed Regulations Implementing the Volcker Rule).

The SEC will accept comments until January 13, 2012.

For more information on proposed Rule 127B, see Legal Update, SEC Proposes ABS Conflict of Interest Prohibition under Dodd-Frank.