Elevating Compliance with Fixed-Fee Regulation AB Audits

In the ever-evolving landscape of regulatory compliance, the world of structured finance is no exception. As financial institutions navigate the intricate web of regulations and standards, ensuring adherence to Regulation AB stands as a critical component. This blog post explores how the NDB Alliance of Firms simplifies and enhances compliance through comprehensive Regulation AB audits, empowering financial institutions to meet the requirements of this significant regulatory framework.

Key Aspects of Regulation AB

Regulation AB 1122 is a set of rules issued by the U.S. Securities and Exchange Commission (SEC) as part of the broader Regulation AB, which governs asset-backed securities (ABS). Specifically, Regulation AB 1122, which is part of the broader Regulation AB rules, focuses on improving the transparency and disclosure of ABS transactions and enhancing investor protection.

●     Disclosure Requirements: Regulation AB 1122 mandates detailed disclosure about the asset-backed securities being offered. This includes information about the assets backing the securities, the structure of the transaction, and the servicing of the assets.

●     Servicing Criteria: The regulation introduces criteria for the servicing of asset-backed securities. Servicers must adhere to specific practices to ensure the proper handling and management of the underlying assets.

●     Data Transparency: The regulation requires issuers to provide detailed data on the underlying assets, including performance metrics and other relevant information. This is intended to enhance transparency and provide investors with a clearer understanding of the risks and performance associated with their investments.

●     Compliance and Reporting: Issuers of asset-backed securities are required to comply with the new disclosure and servicing criteria and to report their compliance to the SEC. This aims to ensure ongoing transparency and accountability in the ABS market.

Regulation AB 1122 was part of a broader effort by the SEC to reform and enhance the regulation of asset-backed securities following the financial crisis of 2008. The goal was to address issues related to transparency, risk management, and investor protection in the ABS market.

Understanding the Significance of Regulation AB

Regulation AB, established by the U.S. Securities and Exchange Commission (SEC), sets forth a comprehensive framework for asset-backed securities (ABS) offerings and reporting. It encompasses a wide range of requirements related to the issuance and ongoing disclosure of ABS, impacting not only issuers but also underwriters, trustees, and other market participants.

Compliance with Regulation AB is not optional; it's a legal requirement. Non-compliance can lead to regulatory penalties, litigation risks, and damage to an institution's reputation. Therefore, financial institutions involved in structured finance transactions must adhere to the stringent standards set by Regulation AB.

The Role of Regulation AB Audits

Regulation AB audits serve as a critical tool in ensuring compliance with the regulatory requirements. These audits are conducted to assess whether financial institutions are in alignment with the various aspects of Regulation AB, which include:

● Offering Document Requirements: Ensuring that offering documents accurately represent the characteristics of the assets being securitized.

● Data Collection and Reporting: Properly collecting, storing, and reporting data on the assets within the pool.

● Asset-Level Disclosure: Providing detailed asset-level information to investors.

● Servicing Criteria: Meeting specific servicing criteria for securitized assets.

● Ongoing Reporting: Regularly disclosing performance data for the underlying assets.

NDB Alliance of Firms' Expertise in Regulation AB Audits

The NDB Alliance of Firms understands the complexities and nuances of Regulation AB compliance. We offer specialized Regulation AB audit services tailored to the unique requirements of financial institutions involved in structured finance transactions. Here's how we empower our clients:

1. Customized Audits We recognize that each structured finance transaction is unique, and Regulation AB requirements may vary. Our Regulation AB audits are customized to align with the specific characteristics of the asset-backed securities involved.

2. Expert Team Our audit team comprises seasoned professionals with deep expertise in structured finance and regulatory compliance. They possess a comprehensive understanding of Regulation AB, allowing them to provide valuable insights and guidance throughout the audit process.

3. Risk Mitigation Our audits not only identify compliance gaps but also offer proactive risk mitigation strategies. We help financial institutions address any issues and enhance their compliance posture, reducing the likelihood of regulatory challenges.

4. Ongoing Support The NDB Alliance of Firms is committed to providing ongoing support. We stay updated on regulatory changes related to Regulation AB and offer guidance to help our clients adapt to evolving requirements.

Elevating Compliance, Ensuring Confidence

In the ever-changing landscape of structured finance and regulatory compliance, the NDB Alliance of Firms stands as a trusted partner. Our tailored Regulation AB audits empower financial institutions to meet the stringent requirements of this vital regulatory framework. By simplifying compliance and enhancing assurance, we enable our clients to navigate the complexities of structured finance with confidence.

To learn more about how the NDB Alliance of Firms can elevate your Regulation AB compliance efforts and support your structured finance transactions, please contact Christopher Nickell, CPA at cnickell@ndbcpa.com or at 850-295-0808.