Capital Markets Accounting Developments Advisory 2010-7
October 2010
At a glance
Series trusts and protected cell companies are often utilized in securitization and financial instrument transactions to hold assets and issue securities to investors that are secured by the assets.
October 8, 2010
Proposed Regulations (REG-119921-09) Series of Series Trust and Cells of Protected Cell Company Treated as Separate Entities
Series trusts and protected cell companies are often utilized in securitization and financial instrument transactions to hold assets and issue securities to investors that are secured by the assets. They are usually a single registered trust or company comprised of multiple and separate series of trusts or cells, each with its own assets and investors, but often sharing the same governing documents, management, servicer and adviser.
One of the main benefits of utilizing series or cells is that an entire new set of agreements do not need to be created and negotiated for each transaction while at the same time allowing assets and investors from one series or cell to be segregated from the others. The segregation avoids commingling of assets of different investors and ensures that no claims against one series or cell would be covered by others. The sharing arrangement allows for great flexibility and cost efficiencies.