Rating Agencies Remain under SEC Spotlight

December 30th, 2014

Last week, the Securities and Exchange Commission (SEC) published its annual report to Congress on Nationally Recognized Statistical Rating Organizations (NRSROs) as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).  Credit rating agencies came under increased scrutiny following their role in the 2008 financial crisis. Since then, the SEC has increased its oversight of the credit rating agencies and their activities.

Compared to 2013, the SEC found that credit rating agencies improved their compliance resources, monitoring and culture.  SEC examinations found enhanced documentation, resources and document retention.  Accordingly, the SEC commented, “The findings and recommendations in the 2014 examination report demonstrate the impact of rigorous oversight by the SEC and regular examinations by the Office of Credit Ratings.”

Despite improvements, the SEC raised concerns with the use of affiliates or third-party contractors by credit rating agencies.  SEC staff also made recommendations to avoid conflicts of interest in rating business operations and improve adherence to compliance policies.


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