SEC Staff Extends Indefinitely No-Action Relief Permitting Omission of Credit Ratings from Registration Statements under Regulation AB
The staff of the SEC’s Division of Corporation Finance (the “staff”) issued a
letter extending indefinitely prior no-action relief under which an issuer of asset-backed securities may omit the credit ratings disclosure required by Item 1103(a)(9) and 1120 of Regulation AB from a prospectus that is part of a registration statement relating to an offering of asset‑backed securities. Items 1103(a)(9) and 1120 of Regulation AB require disclosure of whether an issuance or sale of any class of offered asset‑backed securities is conditioned on the assignment of a rating by one or more rating agencies. Section 939G of the Dodd-Frank Act nullified Rule 436(g) under the Securities Act of 1933 (the “1933 Act”). (Rule 436(g) formerly provided that ratings issued by NRSROs on debt securities, convertible debt securities and preferred stock were not considered part of the registration statement for the purposes of Sections 7 and 11 of the 1933 Act with the result that NRSROs were not treated as experts and not subject to related 1933 Act liability.) The prior relief was prompted by an unwillingness on the part of NRSROs to provide consents following the effectiveness of Section 939G. In extending the relief, the staff cited continued reluctance on the part of NRSROs to provide consents, ongoing uncertainty in the asset-backed securities markets and its need to consider whether and, if so, how regulatory action related to the Dodd-Frank Act should affect the SEC’s disclosure requirements regarding credit ratings for asset‑backed securities offerings.