"Wall Street Regulator Implements Dodd Frank Rule to Combat Trader Conflicts"

The U.S. Securities and Exchange Commission (SEC) has adopted a rule, mandated by the Dodd Frank law, that prohibits traders in asset-backed securities from betting against the same assets they sell to investors. The rule aims to prevent conflicts of interest and eradicate behavior that contributed to the 2008 global financial crisis. The rule applies to underwriters, placement agents, and sponsors for asset-backed securities, but exempts activities such as hedging risk and market-making. The SEC modified the proposal to include exceptions for affiliates not acting in concert with traders and investors with "long" positions. The rule will be effective for asset-backed securities closing 18 months after it appears in the Federal Register.