What Is SEC Form 10-D?

SEC Form 10-D is a filing with the Securities and Exchange Commission (SEC), also known as the Asset-Backed Issuer Distribution Report. Certain asset-backed security issuers use it to notify regulators and investors of interest, dividends, and capital distributions. An asset-backed security is a financial security that has a pool of other assets, such as mortgages or car loans, as its underlying collateral.

Key Takeaways

  • SEC Form 10-D is a filing with the Securities and Exchange Commission (SEC), also known as the Asset-Backed Issuer Distribution Report.
  • Form 10-D contains the supporting details surrounding previous or upcoming distributions from asset-backed securities.
  • SEC Form 10-D requires that issuers provide the SEC with the distribution reports that they send to trustees and holders of the securities, as well as asset-level information.

Understanding SEC Form 10-D

SEC Form 10-D contains the supporting details surrounding previous or upcoming distributions from asset-backed securities. The information on this form includes the total value of the distribution, timing of the distribution, and liquidation of the investments underlying the asset-backed security. SEC Form 10-D has become more important for investors and government officials following the subprime meltdown in 2007. This form helps interested parties to better understand distributions from asset-backed bonds.

Although SEC Form 10-D provides valuable data on asset-backed securities, investors should also consider other sources of information.

Benefits of SEC Form 10-D

SEC Form 10-D provides investors with timely and generally accurate information on asset-backed securities. Since these are signed documents submitted to the SEC, investors can have a high level of confidence in them. That is particularly important for asset-backed securities, where it is crucial to know if the physical assets actually exist.

While some of the information given in SEC Form 10-D, such as frequency of distributions, is easy to get elsewhere, other data may be harder to find. Details, or lack of them, in the distribution reports and asset-level information can help knowledgeable accountants find signs of possible fraud.

Criticism of SEC Form 10-D

Like all government requirements, SEC Form 10-D imposes costs on businesses. These costs are ultimately passed on to investors in the form of lower returns. Furthermore, there are implicit costs in complying with regulations that far exceed the funds spent filling out forms. Most notably, firms may not make certain loans at all because the assets offered as collateral do not meet internal standards designed to make regulatory compliance more manageable.

Naturally, enterprising investors might conclude that it is more profitable to make asset-backed loans directly rather than deal with SEC Form 10-D and other regulatory costs. However, that path requires substantial knowledge and experience, as well as a lot of work.

Requirements of SEC Form 10-D

SEC Form 10-D begins with some basic information on the issuer and distributions. It requires issuers of asset-backed securities to state the frequency of distributions, typically monthly or quarterly. Furthermore, the issuers must provide valid commission file numbers, central index key numbers, and the exact name of the issuer as given in its charter. SEC Form 10-D also requires the name and telephone number of a person to contact if questions arise over the filing and an Internal Revenue Service (IRS) Employer Identification Number (EIN). Finally, issuers need to give the address of their principal executive offices along with their ZIP code and a telephone for the offices. If the name or address of the issuer changed after the last report, they must also give the previous name and address.

Part one of SEC Form 10-D contains the actual distribution information. The first and most important requirement is that the distribution report that the company sends to its trustees and holders of the security must be attached to the exhibit. Furthermore, certain information must be provided separately if it is not included in the reports sent to investors. The issuer must also provide asset-level information on SEC Form 10-D. Finally, the form needs to include asset representations reviewer and investor communications.

Part two of SEC Form 10-D is for other information. Here, issuers describe legal proceedings, sales of securities and use of proceeds, and defaults on senior securities, if any of these events occurred. There are also items for significant obligors of pool assets, changes in sponsor interest in securities, enhancement provider information, information required by SEC Form 8-K that was not reported, and other exhibits.

After part two, SEC Form 10-D requires dated signatures at the end to make it official.