SEC Grants Two Rating Agencies Temporary Exemptions from Conflicts of Interest Rule

The SEC has issued two temporary exemptions from Exchange Act Rule 17g-5(c)(1) ("Conflicts of Interest"). The rule prohibits a nationally recognized statistical rating organization ("NRSRO") from issuing or maintaining a credit rating solicited by a person that, in the most recently ended fiscal year, provided the NRSRO with net revenue equaling or exceeding 10% of the total net revenue of the NRSRO for the fiscal year. In both letters, the SEC issued a temporary and conditional extension of a previous exemptions from the Conflicts of Interest Rule, allowing Morningstar Credit and Kroll Bond Rating Agency, both registered NRSROs, to continue diversifying their businesses beyond CMBS ratings and into other sectors of capital markets.

See: Morningstar Credit Exemption Letter; Kroll Bond Rating Agency Exemption Letter.Related news: SEC Order Extending Temporary Conditional Exemption for Nationally Recognized Statistical Rating Organizations (November 22, 2013); SEC Issues Annual Staff Reports on Credit Rating Agencies (December 24, 2013); SEC Removes References to NRSRO Ratings in Certain Rules and Forms (with Lofchie Comment) (December 27, 2013).