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February 14, 2008 at 08:20 AM
The U.S. Securities and Exchange Commission has registered LACE Financial Corp. as a national recognized statistical rating organization.
LACE, Frederick, Md., has received approval to act as an NRSRO for insurance companies as well as for other types of issuers, such as banks and corporate debt issuers.
Congress included a provision creating the NRSRO designation program in the Credit Rating Agency Reform Act of 2006, in an effort to encourage major rating agencies to abide by requirements governing matters such as conflict-of-interest disclosure and disclosure of rating methodology.
The NRSRO rules normally prohibit an NRSRO from getting more than 10% of its revenue from a single client.
In 2007, “LACE maintained credit ratings on asset-backed securities solicited by a person that provided LACE with 10% or more of its total revenues for that year,” SEC officials note in a discussion of LACE’s NRSRO registration application.
