Mar. 23, 2023
March 23, 2023 As a household investor, I remain deeply concerned about the proposed exemptions in the new SEC rule regarding conflicts of interest in securitization transactions involving asset-backed securities (ABS). It is crucial to emphasize the repeated failures of securitization participants to self-regulate and the potential harm that these exemptions may bring to the market. Time and again, we have witnessed securitization participants prioritizing their own interests over the market's stability and the well-being of individual investors like myself. The trust placed in their ability to self-regulate has been repeatedly eroded due to financial misconduct and lack of accountability. The exemptions for risk-mitigating hedging activities, bona fide market-making activities, and liquidity commitments not only leave room for potential abuse but also insinuate that the interests of securitization participants are being placed above the need to protect the market. These exemptions could serve as loopholes for unscrupulous actors to engage in activities that conflict with the market's integrity, putting the financial security of investors like me at risk. Furthermore, these exemptions and similar rule changes may inadvertently endanger the market by creating a false sense of security. The belief that such rules are in place to protect the market might lead to complacency and a lack of vigilance, making it easier for bad actors to exploit the system. This could result in significant financial losses for individual investors and, in the worst-case scenario, trigger a domino effect that destabilizes the entire market. In light of these concerns, I strongly urge the SEC to reconsider these exemptions and place greater emphasis on safeguarding the market and investors' interests. It is crucial to establish stringent regulations that eliminate conflicts of interest and prevent future financial crises, thereby ensuring a secure, stable, and transparent environment for all investors.