The U.S. Securities and Exchange Commission on Monday adopted a financial crisis-inspired rule barring traders in asset-backed securities from betting against the same assets they sell to investors, Reuters reported. The SEC move is mandated by the Dodd Frank law, aimed at eradicating behavior seen in the 2008 global financial crisis. The rule is among the last to be adopted under 2010's Dodd Frank Wall Street reform legislation and faced a winding road to completion. An earlier version on traders' "conflicts of interest" was first proposed in 2011 but never finalized. The rule blocks "securitization participants" from entering deals that involve shorting or buying credit-default swaps against those same securities. Parties covered by the rule include underwriters, placement agents and sponsors for asset-backed securities.
