Mar. 24, 2023
March 24, 2023
Dear Sir/Madam,
I appreciate the SEC's initiative in addressing conflicts of interest through proposed rule S7-01-23 for securitizations. However, I recommend removing exceptions for risk-mitigating hedging, bona fide market making, and specific liquidity commitments, as they could be exploited to engage in conflicted practices, undermining the rule's effectiveness.
Examples of potential loopholes include:
Risk-mitigating hedging: Securitizers might hedge to benefit their interests at investors' expense.
Bona fide market making: Securitizers could manipulate the market for personal gain.
Certain liquidity commitments: Securitizers may use this exception to dodge losses at investors' expense.
Additionally, I suggest expanding the rule's scope to encompass collateralized debt obligations and other securitization transactions to promote transparency, protect investors, and maintain market integrity.
In conclusion, I do not support this rule given its potential for abuse by those with more money.
Thank you for considering my recommendations.
Sincerely,
Travis Lyons