The Association For Financial Professionals Wants SEC Chairman Cox To Push Harder For Reform Of Credit Rating Agencies
The Association for Financial Professionals is calling on Securities and Exchange Commission head Christopher Cox to use the SEC’s authority to push for the reform of the credit rating agencies.
In a letter from the AFP, CEO Jim Kaitz urged Cox to use the authority that Congress granted the SEC with the Credit Rating Agency Reform Act of 2006, which gives the SEC permission to hold the agencies accountable for providing timely and accurate ratings.
SEC Director of Trading and Markets Erik Sirri has said, however, that although the SEC can hold credit rating systems accountable for their ratings, it does not have the authority to interfere with the way that agencies assign ratings, which is a key issue that is impacting the current subprime mortgage market crisis.
The AFP, made of 16,000 financial professionals, wants the SEC to tackle the abusive and unfair practices that negatively affect the legitimacy of the credit rating system.
Sirri says the SEC is developing rules that could address the prohibition or disclosure of conflicts of interests at the agencies and the need to have different ratings for structured financial products and corporate securities. The SEC is also thinking about removing references to credit rating agencies from its own rules (there are more than 30 references) so market participants won’t rely on the agencies as much.
SEC based on the SEC’s examination of the nine SEC-registered credit-rating agencies or nationally recognized statistical rating organizations (NRSROs).
The securities fraud lawyers at Shepherd Smith and Edwards have more than a century of combined experience in securities law and the securities industry. We have helped thousands of victims of investor fraud recoup their losses.
Related Web Resources:
AFP Urges SEC to Fully Exercise Oversight Authority Over Credit Rating Agencies, PRNewswire, March 24, 2008
List of Credit Ratings Agencies, DefaultRisk.com
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