On July 9, 2013, the DOL issued a final amendment to Prohibited Transaction Exemption2007-5 (Exemption) that replaces the prior definition of "ratings agency" with a new generic definition. The new definition changes the circumstances under which retirement plans may invest in asset-backed and mortgage-backed securities.
- The SEC currently recognizes as a nationally recognized statistical ratings agency;
- Indicated on its most recently filed SEC Form NRSRO that it rates "issuers of assetbacked securities"; and
- Has, in the 12 months prior to the initial issuance of the securities, provided at least three "qualified ratings engagements." A qualified ratings engagement is one:
- Requested by an issuer or underwriter of securities in connection with the initial offering of the securities;
- For which the ratings agency is compensated for providing ratings;
- Which is made public to investors generally; and
- Which involves the offering of securities of the type that are granted relief by the underwriter exemptions.