Torys' bulletin on new SEC rules on credit rating agencies featured in The Globe and Mail Report on Business

SEC Plans New Rules for Credit Agencies

March 02, 2009

As former AAA-rated market darling AIG continues to melt down, U.S. regulators are rolling out new rules to restore the credibility of rating agencies.

A new code of conduct for the likes of DBRS, Moody's and S&P comes into play on April 10, 2009. The new rules are intended to govern the interaction between companies and the agencies that pass judgment on their debt.

In a recent bulletin, New Rules in the United States for Interactions with Credit Rating Agencies, Torys notes that the SEC will block agencies from making recommendations on how to achieve desired ratings, and then rating the obligor or debt instrument that was the subject of the advice: "In essence, the SEC does not want the agency to rate its own work."

There is also a move to separate the credit rating accountants from the agency executives who are setting the fees. Torys' view on that move is that "the SEC wants to remove from fee negotiation those persons directly involved in issuing credit ratings."

Read the full article here.


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