Clifford Chance

SEC staff no-action relief simplifies compliance with ABS conflicts of interest rule

May 20, 2025

On May 16, 2025, the Staff of the Division of Corporation Finance of the Securities and Exchange Commission issued a no-action letter (the "Rule 192 Letter", available here) that relieves some of the compliance concerns around the "substantially the economic equivalent of a [conflicted] transaction" prong of Rule 192(a)(3)(iii) (the "Catch-All Provision") under the Securities Act of 1933, as amended. It does this by recognizing an alternative compliance approach based on information access restrictions.

This no-action relief responds to a joint request letter from industry groups whose members had been encountering practical difficulties in developing policies and procedures related to the Catch-All Provision. The request letter acknowledges that many industry participants already have "need to know" policies and procedures for information barriers in place. In addition, the request letter argues that the requested relief is consistent with the treatment of affiliates and subsidiaries that do not obtain information about a relevant asset-backed security or its underlying assets. Securitization participants will want to consider reviewing and updating their policies and procedures to take advantage of the relief offered by the Rule 192 Letter.

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