SEC Votes to Crack Down on Credit Ratings Agencies

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;