There are several regulatory developments that could come into effect "at any time" that European issuers should keep in mind when executing cross-border deals that are sold into the U.S., Mayer Brown lawyers said in a conference call this morning.
Stuart Litwin, a partner and co-head of the firm's global finance practice who spoke on the call, said regulators have not disclosed a specific timeframe for when these regulations would take effect.
Litwin highlighted two relatively recent developments under the Jumpstart Our Business Startups Act (JOBS Act) that would impact structured finance deals. This regulation was signed into law by President Barrack Obama on April 5. Litwin said that it can benefit ABS because it would eliminate U.S. federal securities law restrictions on certain structured finance deals as long as the deals were $50 million or under. Currently, there has been no formal proposal on how exactly the law applies so Litwin said it was difficult to discuss just how much of an impact it could have on future issuance.
Another proposal under the JOBS Act would eliminate advertising restrictions for private and 144A deals. The elimination of these restrictions can have a significant impact on how securities are offered and sold by permitting expanded marketing efforts to a non-core investor base of "credit investors."
Today marketing of securities can only be directed and sold to "qualified institutional buyers", Litwin said. By removing this prohibition, participants in these types of private placements could solicit broader investor interest publicly and across various forms of media, including newspaper advertisements, Web pages, email, and social media.
Among the other changes that are set to come into effect at anytime, which Litwin highlighted on the call, are the status of risk retention and Regulation AB II, which would require loan level data disclosure for many asset classes as well as many public type disclosures that would affect 144A and private transactions.
Litwin said that the Securities and Exchange Commission has not moved ahead with implementing the rule because it is currently in discussion with various privacy groups, who are mostly concerned that the loan level data disclosures could lead to increased identity theft.
Another point issuers should also be mindful of are risk retention rules. At the moment, the only hold up on that end, said Litwin is how the Consumer Financial Protection Bureau plans to define "qualifying mortgages", but once this is in place, it is likely that the rules on risk retention will follow soon thereafter.
The call also looked at some of the bigger regulatory developments under the Dodd Frank Act such as amendments to the Commodity Exchange Act by Title VII of Dodd-Frank as well as the issuance of three separate notices of proposed rulemaking, one final rule and new swap definitions.