Subject: File No. S7-18-11
From: Francis Lambert

August 8, 2011

The proposed rule mandates many records retention requirements of three years. Since it is highly possible that the effects of a credit rating decision may not arise until after that retention period expires, the three year requirement is insufficient to allow the Commission the range of time it may need to investigate malfeasance by a credit rating agency. Three year retention is more suited to records supporting a transaction decision, such as the requirement for retention of broker/dealer email.

The credit rating decision is much more like the attestation of an auditor than a mere transaction. The procedures of credit rating agencies are similar to outside auditors. Their rating decisions have an equally important impact on the decision making processes of investors as the attestations of outside auditors.

With that in mind, I believe that it is preferable that the proposed rule mandate record retention requirements similar to section 802 of the Sarbanes-Oxley act. This section requires that outside auditors maintain working papers and other related materials for a period of seven years, as described here:

This level of records retention in regards to both the retention period and the actual content being retained is much more in line with nature of the credit agencies procedures and decisions, as well as the potential impact they have on the credibility of the markets relied upon by the investing public.