USA Law and Practice Contributed by: Bjorn Bjerke, Corey Reis and Joshua Kopel, A&O Shearman
Retention Rules also amounts to a disclosure violation, there could be separate SEC or private action on that basis, as discussed in 4.2 General Disclosure Laws or Regulations. Wilful violations of the Risk Retention Rules may also give rise to federal or state criminal actions. 4.4 Periodic Reporting The sponsor must file Form 15-G on EDGAR at the end of any quarter in which there has been a repurchase demand made under the transaction documents for breach of representations and warranties. If there have been no such requests, an annual Form 15-G filing must be made attest - ing to that fact. Issuers of securities offered and sold in a regis - tered offering, and issuers with assets in excess of USD10 million at fiscal year end and a class of securities (other than exempted securities) held by more than 2,000 persons (or more than 500 persons that are not accredited investors) may be subject to additional reporting requirements, including: • annual reports on Form 10-K (with certain ABS-specific modifications specified in Reg, AB II); • current events on Form 8-K; and • Issuer Distribution Reports on Form 10-D. Given that privately placed ABS are not likely to be so widely held that these requirements are triggered, they will, as a practical matter, only apply to securities sold in a registered offering. Broker-dealers may be restricted from providing price quotations for private debt securities by virtue of Rule 15c2-11 unless certain periodic information and information about the issuer and the offering is made available to the public in a
manner that complies with the SEC’s no-action letter issued on 30 November 2022. That letter postpones the requirement to comply with the rule until 4 January 2025 subject to satisfying certain requirements with respect to the issuer or the securities. As such, broker-dealers can continue to provide quotations for ABS offered under Rule 144A if they reasonably believe that the issuer will provide the information specified in Rule 144(d)(4) upon request. Such informa - tion would normally be “a very brief statement of the nature of the business of the issuer and the products and services it offers; and the issuer’s most recent balance sheet and profit and loss and retained earnings statements, and similar financial statements for such part of the two preceding fiscal years as the issuer has been in operation (the financial statements should be audited to the extent reasonably available).” However, in the Rule 144A adopting release, the SEC noted with respect to asset-backed secu - rities that: “Instead of the financial statements and other information required about issuers of more traditional structure, the Commission would interpret the information requirement to mandate provision of basic, material information concerning the structure of the securities and distributions thereon, the nature, performance and servicing of the assets supporting the struc - tures, and any credit enhancement mechanism associated with the structure.” 4.5 Activities of Rating Agencies Registered rating agencies, referred to as NRSROs, are regulated by the SEC. Sections 15E and 17 of the Exchange Act and the rules promulgated thereunder establish a detailed set of records that must be created and disclosed to the SEC, and mandate that some of this infor - mation must be made publicly available free of charge, including the assigned credit rating and any subsequent upgrade or downgrade.
476 CHAMBERS.COM
Powered by FlippingBook