SEC Creates ‘Worthless’ Rule for Asset-Backed Issuers

The U.S. Securities and Exchange Commission failed investors by allowing issuers of asset-backed bonds to conduct their own checks of data on the underlying debt, said Sue Allon, founder of a mortgage-review company.

The agency on Jan. 20 approved rules that will force issuers to conduct reviews of loans and leases packaged into securities and disclose information about the results. The SEC, creating regulation required by the Dodd-Frank financial-overhaul law, said bond sellers could hire third parties to handle the audits, without mandating the use of outside companies even as it created increased liability for such firms if they are hired.