S.Amdt. 4112

SA 4112. Mr. MERKLEY (for himself and Mr. Levin) submitted an
amendment intended to be proposed to amendment SA 3739 proposed by Mr.
Reid (for Mr. Dodd (for himself and Mrs. Lincoln)) to the bill S. 3217,
to promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes; which was ordered to lie on the table, as follows:

On page 1054, between lines 10 and 11, insert the
following:
(c) Conflicts of Interest.--The Securities Act of 1933 (15
U.S.C. 77a et seq.) is amended by inserting after section 27A
the following:

``SEC. 27B. CONFLICTS OF INTEREST RELATING TO CERTAIN
SECURITIZATIONS.

``(a) In General.--An underwriter, placement agent, initial
purchaser, or sponsor, or any affiliate or subsidiary of any
such entity, of an asset-backed security (as such term is
defined in section 3 of the Securities and Exchange Act of
1934 (15 U.S.C. 78c), which for the purposes of this section
shall include a synthetic asset-backed security), shall not,
during such period as the asset-backed security is
outstanding or such lesser period as the Commission
determines is appropriate, engage in any transaction that
would involve or result in any material conflict of interest
with respect to any investor in a transaction arising out of
such activity.

[[Page S3944]]

``(b) Rulemaking.--Not later than 180 days after the date
of enactment of this section, the Commission shall issue
rules for the purpose of implementing subsection (a)
including any appropriate disclosures or other measures. The
disclosure by a person of a material conflict of interest
with respect to a transaction prohibited under subsection (a)
may not be construed to permit any person to engage in the
transaction.
``(c) Exception.--The prohibitions of subsection (a) shall
not apply to risk-mitigating hedging activities in connection
with positions or holdings arising out of the underwriting,
placement, initial purchase, or sponsorship of an asset-
backed security, provided that such activities are designed
to reduce the specific risks to the underwriter, placement
agent, initial purchaser, or sponsor associated with
positions or holdings arising out of such underwriting,
placement, initial purchase, or sponsorship. This subsection
shall not otherwise limit the application of section 15G of
the Securities Exchange Act of 1934.''.
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