Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Friday, September 30, 2011

SEC Staff Identifies Concerns at Credit Rating Agencies

SEC staff issued a report summarizing the staff's observations and concerns arising from the examinations of ten credit rating agencies registered with the SEC as Nationally Recognized Statistical Rating Organizations ("NRSROs") and subject to Commission oversight.  The report was required by the Dodd-Frank Act, which imposed new reporting, disclosure and examination requirements to enhance the regulation and oversight of NRSROs.

The report notes that despite changes by some of the examined credit rating agencies to improve their operations, Commission staff identified concerns at each of the NRSROs. These concerns included apparent failures in some instances to follow ratings methodologies and procedures, to make timely and accurate disclosures, to establish effective internal control structures for the rating process and to adequately manage conflicts of interest. The report notes that the staff made various recommendations to the NRSROs to address the staff’s concerns and that in some cases the NRSROs have already taken steps to address such concerns.

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