The Securities and Exchange Commission's disclosure rules for asset-backed securities, which servicers must comply with beginning Jan. 1, 2006, were adopted to deal with the fact that "one size does not fit all asset classes," according to Jennifer Williams, an attorney adviser with the SEC's Office of Rulemaking.Speaking at the Mortgage Bankers Association's Asset Administration and Technology conference in Chicago, Ms. Williams noted that while the rules were effective as of March, a transition period is in effect during which the disclosures are voluntary. Ms. Williams clarified that servicers need not disclose all their procedural details and that disclosures are limited to "what a reasonable investor would find material." For instance, facts relating to a servicer's operating policies that are immaterial to investors need not be disclosed. In addition, "sensitive pricing information" doesn't need to be disclosed. This means that a servicer has to make a judgment call, she noted. If a servicer does not disclose something that turns out to be material, she advised that the best course of action would be to contact the SEC staff in the post-offering period.
