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Leveraged Loan Risks May Require Legislation, SEC's Jackson Says

  • SEC commissioner concerned about possible liquidity mismatch
  • He questions whether agency has enough authority over market
Robert Jackson Jr.
Robert Jackson Jr. Photographer: Bill Clark/CQ-Roll Call Group via Getty Images

The U.S. Securities and Exchange Commission may need more power from Congress to police risks emerging in the $1.1 trillion market for leveraged loans, according to a top official at the Wall Street regulator.

"As a former banker, I think leveraged loans are an area where investors’ liquidity expectations might not match up with reality, and the SEC should do all we can to help investors understand that,” Commissioner Robert Jackson Jr. said in an interview this week. “The question is, is it time to go to Congress to get a new law to make sure the SEC can do that work? It may be time."