SEC Temporarily Exempts NRSROs From Some ABS Rating Requirements

The Securities and Exchange Commission May 19 issued an order to grant credit rating agencies a temporary, conditional exemption from compliance with certain requirements designed to address conflicts of interest and to improve the quality of credit ratings for asset-backed securities.

Rule 17g-5(a)(3) under the 1934 Securities Exchange Act requires nationally recognized statistical rating organizations to seek certain representations from the securities’ issuers and to certify that they have met this obligation.

However, according to the order, securities regulators in the United Kingdom, Germany, Canada, and Japan, as well as several trade associations—including the Securities Industry and Financial Markets ...