SEC moving to issue recommendations for firms that sell asset-backed bonds Regulation

October 15, 1997|By BLOOMBERG NEWS

NEW YORK -- The Securities and Exchange Commission is preparing to issue recommendations on what companies that sell asset-backed bonds must tell investors about the offerings.

The recommendations, to be issued perhaps by year's end, will address long-standing concerns among investors who say they aren't getting enough information to figure how much to pay for the bonds and how much yield they should get.

Even when information is available, some investors say they don't have enough time to examine documents such as the preliminary prospectus, called a red herring.

"It seems like I get the red [herring] in my hand, and they're pricing it that afternoon," said Doug McKoy, who trades asset-backed bonds at Conseco Capital Management in Carmel, Ind., which has $3 billion of the securities. "I wish they would give us a little more leeway."

The SEC is hammering out guidelines. "We're coming up with a disclosure framework for asset-backed issuers," said Meredith fTC Cross, deputy director of the SEC's corporate finance division. There will be a period of public comment before any recommendations are adopted as law.

Pub Date: 10/15/97

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