SEC Reports on CRAs Examine CRA Focus on Compliance and Competition

By Regulatory News

December 18, 2018

SEC released two reports on nationally recognized statistical rating organizations (NRSROs), which show that some firms are self-reporting instances of noncompliance and some smaller firms are continuing to compete with the larger firms in certain rating categories. The report on NRSRO examinations summarizes the findings and recommendations within each of the eight review areas required by statute. The annual report on NRSROs discusses the state of competition, transparency, and conflicts of interest among the firms and identifies applicants for NRSRO registration.

The NRSRO summary report summarizes the findings and recommendations within each of the eight review areas required by statute, which are policies, procedures, and methodologies; management of conflicts of interest; implementation of ethics policies; internal supervisory controls; governance; DCO activities; complaints; and post-employment factors. The report summarizes the examinations conducted by the SEC staff under Section 15E(p)(3) of the Securities Exchange Act of 1934. This regulatory regime was established by the Credit Rating Agency Reform Act of 2006 and amended by the Dodd-Frank Act. The 10 credit rating agencies registered as NRSROs as of November 30, 2018 are A.M. Best Rating Services Inc, DBRS Inc, Egan-Jones Ratings Company, Fitch Ratings Inc, HR Ratings de México S.A. de C.V., Japan Credit Rating Agency Ltd, Kroll Bond Rating Agency Inc, Moody’s Investors Service Inc, Morningstar Credit Ratings LLC, and S&P Global Ratings. Overall, the credit rating agencies registered with SEC continue to promote compliance by enhancing their policies, procedures, and internal controls in response to SEC rules and staff examinations.

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Keywords: Americas, US, Banking, Insurance, Securities, CRAs, NRSRO Reports, NRSRO, Dodd Frank Act, SEC

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