The U.S. Congress and U.S. regulatory agencies have imposed or proposed broad-based and aggressive laws and rulemaking in response to the failure of securitizations directly or indirectly backed by U.S. subprime residential mortgage loans originated in the several years prior to the onset of the financial crisis in 2007. Notwithstanding this aggressive response, there is no empirical evidence that transactions backed by other types of assets, including asset-backed securities (ABS) of foreign issuers, have been prone to such failures or merit coverage in the same regulatory scheme as applies to securitizations backed by subprime residential mortgage loans.
Historically, the main U.S. securities law concerns of foreign issuers engaged in securitization offerings in the U.S. were (i) observing the offering and sales restrictions for private offerings exempt from the registration requirements of the Securities Act of 1933 for non-registered offerings and (ii) structuring the transactions to utilize one of the exemptions available under the U.S. Investment Company Act of 1940. More recently, however, there have been a number of new or proposed U.S. rules governing ABS that many foreign ABS issuers may not be aware may apply to them, even though they intend to access U.S. investors only by means of private offerings. These changes are summarized below.