Ruling Should Spur Asset-Backed Market
Talley, Karen, American Banker
Investors have won a victory in their quest to receive more information about securities backed by mortgages or other assets.
The triumph comes in the form of a regulatory decision that allows investment firms to publish more comprehensive information about securitized issues than in the past.
Until now investment banks have limited what they say about such issues to avoid being accused of trying to hype deals that they are securitizing.
But the Securities and Exchange Commission, which regulates the asset- backed market, said last week that brokers and dealers can dispense information, opinions, and even recommendations. The information could supplement or interpret the dry language contained in prospectuses or offering documents.
As long as certain conditions are met, supplemental publications by investment banks "shall not be deemed to constitute an offer for sale or an offer to sell" asset-backed securities, said Michael H. Mitchell, special counsel to the SEC's division of corporate finance.
These reports would be in addition to research that firms routinely put out. They must not give extra weight to issues the firm is involved with, Mr. Mitchell said.
Expanded reporting is expected to improve the market for issues backed by mortgages, home equity loans, or other asset-based credit. "Better information translates into more-efficient pricing, execution, and analysis," said George P. …