Jenner & Block

Client Advisory: SEC Proposes New Rules For Compensation Committees and Sponsors of Asset-Backed Securities

On March 30, 2011, the Securities and Exchange Commission proposed rules affecting the standards that apply to compensation committees and new disclosures related to its consultants.  The SEC also proposed rules affecting sponsors of asset-backed securities.  The Compensation Committee Release implements the prohibition in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 against the listing of issuer equity securities by national securities exchanges and associations if issuers do not comply with new compensation committee and consultant rules regarding independence standards and disclosure of conflicts of interest.  The Risk Retention Release implements the Dodd-Frank Act’s requirement that sponsors of asset-backed securities retain not less than five percent of the credit risk of the assets underlying the ABS, and offers a number of alternatives to comply with the risk retention requirement.

This Jenner & Block alert discusses key changes reflected in the SEC’s proposals.  Comments on the Compensation Committee Release are due by April 29, 2011 and comments on the Risk Retention Release are due by June 10, 2011.