News | 04.18.19
Leveraged Loan Risks May Require Legislation, SEC's Jackson Says
SEC Commissioner Robert Jackson Jr. says the agency may need more power from Congress to supervise risks emerging in the $1.1 trillion market for leveraged loans. "As a former banker, I think leveraged loans are an area where investors’ liquidity expectations might not match up with reality, and the SEC should do all we can to help investors understand that," says Jackson. "The question is, is it time to go to Congress to get a new law to make sure the SEC can do that work? It may be time." Mutual funds are increasingly buying loans to highly indebted companies, raising concerns about whether the sometimes hard-to-sell debt is appropriate for investors who typically like to be able to trade easily in and out of assets. SEC Chairman Jay Clayton is among the regulatory officials who have expressed concerns about a possible liquidity mismatch for mutual funds that invest in leveraged loans.
Read the full article on Bloomberg