Department Of Labor Proposes Expansion Of Underwriter Exemptions For Asset-Backed Securities
The Department of Labor has proposed an amendment to the "underwriter exemptions," individual exemptions that provide relief from certain ERISA prohibitions for the operation of asset pool investment trusts and for the acquisition, holding and disposition of asset-backed and mortgage-backed certificates by ERISA governed investors. If adopted, the amendment would significantly expand the relief currently available under the underwriter exemptions.
Background
ERISA contains stringent conflict of interest and prohibited transaction rules that apply to transactions entered into by plans subject to ERISA. These rules give rise to particularly difficult issues for securitization transactions because, under certain structures, the assets of the issuer of asset-backed securities would be deemed to be "plan assets" of plans that purchase the securities, subjecting the issuer's operations to the
