Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

SEC Votes to Crack Down on Credit Ratings Agencies

Your article was successfully shared with the contacts you provided.

The Securities and Exchange Commission on September 17 voted to increase oversight of credit ratings agencies by enhancing disclosure and improving the quality of credit ratings.

The Commission voted to “adopt or propose measures intended to improve the quality of credit ratings by requiring greater disclosure, fostering competition, helping to address conflicts of interest, shedding light on rating shopping, and promoting accountability.”

“These proposals are needed because investors often consider ratings when evaluating whether to purchase or sell a particular security,” said SEC Chairman Mary Schapiro in a statement. “That reliance did not serve them well over the last several years, and it is incumbent upon us to do all that we can to improve the reliability and integrity of the ratings process and give investors the appropriate context for evaluating whether ratings deserve their trust.”

The Commission voted to:

Adopt rules to provide greater information concerning ratings histories–and to enable competing credit ratings agencies to offer unsolicited ratings for structured finance products, by granting them access to the necessary underlying data for those products;

Propose amendments that would seek to strengthen compliance programs through requiring annual compliance reports and enhance disclosure of potential sources of revenue-related conflicts;

Adopt amendments to the Commission’s rules and forms to remove certain references to credit ratings by nationally recognized statistical ratings organizations (NRSRO–credit ratings agencies that are registered with the SEC);

Reopen the public comment period to allow further comment on Commission proposals to eliminate references to NRSRO credit ratings from certain other rules and forms;

Propose new rules that would require disclosure of information including what a credit rating covers and any material limitations on the scope of the rating and whether any “preliminary ratings” were obtained from other ratings agencies – in other words, whether there was “ratings shopping”;

Voted to seek public comment on whether to amend Commission rules to subject NRSROs to liability when a rating is used in connection with a registered offering by eliminating a current provision that exempts NRSROs from being treated as experts when their ratings are used that way.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.