SEC Cracks Down on Credit Reporting Agencies

On August 26, 2014 the Securities and Exchange Commission approved final rules cracking down on credit rating agencies and asset-backed securities — two areas that SEC Chairwoman Mary Jo White said were “at the center of the financial crisis,” according to an article in ThinkAdvisor.

In her opening remarks at the SEC open meeting at the agency’s Washington headquarters, White said that the final rules in the “two closely related areas” give investors “powerful new tools” for independently evaluating the quality of asset-backed securities and credit ratings. “ABS issuers and rating agencies will be held accountable under significant new rules governing their activities,” said White, adding that the issuance of “flawed credit ratings by certain credit rating agencies was a key contributor to the financial crisis.” Since 2011, SEC staffers have annually examined each of the nationally recognized statistical rating organizations (NRSROs) registered with the SEC, as required by the Dodd-Frank Act. “While the reports from these reviews have cataloged a number of improvements, they have also identified concerns that persist, including ones related to the management of conflicts of interest, internal supervisory controls, and post-employment activities of former staff of NRSROs,” White said.

Read the full article.

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