The SEC’s proposed overhaul of Regulation AB is attracting criticism for its introduction of skin-in-game and the increase of disclosure required for private placements.
Last week, the regulator’s commissioners unanimously voted in favour of the proposals. These would force sponsors of a securitization to hold 5% of each class of securities that are issued. In addition, shelf registration of 144a private placements will be dependent on disclosure being to the same level as that for retail offerings.
“There is a lot of concern that the 5% requirement and imposing retail disclosure standards to institutional deals will strangle the recovery of the securitisation market,” said Raymond...