SEC Issues Annual Staff Reports on Credit Rating Agencies

The SEC issued its annual staff report on the findings of examinations of credit rating agencies registered as nationally recognized statistical rating organizations (NRSROs). The report noted that the staff found one or more NRSROs lacked comprehensive procedures governing ratings placed under review. The staff also found that oversight of the process for developing new rating methodologies and criteria was not sufficient at one or more NRSROs to ensure independence from business and market share considerations. Other observations from the annual report included:

• The number of NRSROs rose to 10 with HR Ratings de México, S.A. de C.V., registering in November 2012;
• Some smaller NRSROs have gained significant market share in ratings for certain types of asset-backed securities; and
• Transparency is increasing due to some NRSROs issuing unsolicited commentary on ratings issued by other NRSROs.

See: Summary of Report on Findings of Examinations of NRSROs; Report to Congress on NRSROs.See also (prior year's report): SEC Issues Staff Summary Report of Examinations of Rating Agencies (Says Rating Agencies Got Better; Must Get Better Still).