SEC Releases Study to Congress on Credit Rating Agency Independence

The SEC Staff of the Office of Credit Ratings published a report regarding credit rating agency independence.The report was submitted to the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate, and the Committee on Financial Services of the U.S. House of Representatives, and is being submitted pursuant to Dodd-Frank Section 939C ("Securities and Exchange Commission Study on Strengthening Credit Rating Agency Independence").

Part One of the report describes the independence of nationally recognized statistical rating organizations ("NRSROs"), and how such independence affects ratings issued by NRSROs, describes the annual examinations of NRSROs by the SEC, and reviews the U.S. and foreign regulatory rules for the provision of "ancillary services" by the credit rating industry. "Ancillary services" are generally described as services other than the provision of rating.

Part Two of the report includes an overview of the ancillary services provided by each of the ten NRSROs and the potential conflicts of interest involved, reviews the applicable policies and procedures that have been publicly disclosed by NRSROs regarding the ancillary services, and describes the results of relevant findings from recent annual NRSRO examinations. The report concludes that the SEC staff has not found any material problems with the NRSROs' management of conflicts of interest, and thus the staff did not recommend any tightening of the relevant rules.

See:SEC Report.See also: All SEC Special Studies.