Subject: File No. S7-26-10
From: Christopher B. Chuff

November 4, 2010

As a citizen concerned with investment banks ability to create systemic risk within our economy through the construction and sale of ABS, (1) I write in support of Rule 193 and Item 1111(a)(7), but argue that (2) as proposed, the rule does not properly address ABS that are exempt from SEC registration requirements.

(1) It is imperative for the SEC to require issuers of ABS to review the underlying assets and disclose the nature of the issuers review as required by the Act. More important, however, is Rule 193s requirement that issuers of ABS disclose their findings and conclusions concerning the underlying assets. Without this provision, issuers of ABS, such as investment banks, could merely review the underlying assets of ABS and disclose the procedures they administered without being held accountable for selling assets that they potentially believe are likely to decrease in value. By requiring issuers to disclose their findings and conclusions, however, issuers are forced to take a stance concerning the merits of ABS in light of the securitys underlying assets and may be less likely to aggressively sell meritless ABS as a result. This provision enable courts reviewing issuer disclosures to appraise issuers findings and conclusions and determine whether the findings and conclusions were honestly held or whether they reflected misstatements of material fact subjecting issuers to liability under the federal securities laws and SEC Rule 10b-5.

Additionally, as the SEC notes, establishing particularized standards of review for different asset types with different characteristics may be futile at this juncture. Interpretive rules or policy statements can be used to detail acceptable levels of review necessary and practical for different types of transactions after the SEC has gained experience applying this regulation.

(2) Issuers of ABS should be required to provide investors in ABS disclosures required by Rule 193 and Item 1111(a)(7) in order to be afforded the exemptions provided by Rule 506. The exemption afforded by Rule 506 was one of the primary factors influencing ABS significant role in causing the financial crisis. As mentioned below, holding issuers accountable for their findings and conclusions with regard ABS securities will mitigate issuers tendencies to over-issue ABS and dilute the creation of systemic risk within the economy. Conversely, by allowing Rule 193 and item 1111(a)(7) to be avoided by issuers through exemptions, these provisions will become toothless and will fail to effectively mitigate issuer abuse of ABS securities and the build-up of systemic risk as a result of that abuse.