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SEC Issues Annual Staff Reports on Credit Rating Agencies


Washington D.C., Dec. 28, 2015 —

The Securities and Exchange Commission today issued its two annual staff reports on credit rating agencies registered as nationally recognized statistical rating organizations (NRSROs).  The reports show that NRSROs have made operational improvements and have enhanced process accountability, controls and governance, and that smaller NRSROs have made competitive inroads in certain rating categories.

“These reports demonstrate the SEC’s vigilant oversight of the credit rating industry,” said Chair Mary Jo White.  “The staff’s continued efforts are yielding valuable results as we are seeing improvements in the overall compliance cultures at many of the credit rating agencies."

The annual examination report summarizes the staff’s findings from the examinations of each NRSRO as required by the 2010 Dodd-Frank Act.  SEC examiners performed risk assessments on specific areas in addition to examining the eight required review areas.  The report shows that all of the NRSROs have enhanced their understanding of their obligations as regulated entities and that at many of the firms, operational improvements made in prior years are being further integrated and enhanced.

“Regular examinations of each NRSRO are an important component of the SEC’s oversight regime,” said Thomas J. Butler, Director of the SEC’s Office of Credit Ratings.  “The staff is in contact with the firms throughout the year at all levels of the organization to maintain lines of communication, assess potential risks, and promote transparency and compliance.”

The annual report mandated by the 2006 Credit Rating Agency Reform Act discusses the state of competition, transparency, and conflicts of interest at NRSROs.  The report notes that certain smaller NRSROs have continued to increase their market share, particularly for credit ratings of asset-backed securities.  The report also discusses new requirements for NRSROs that took effect in June to address internal controls, conflicts of interest, disclosure of credit rating performance statistics, procedures to protect the integrity and transparency of rating methodologies, disclosures to promote the transparency of credit ratings, and standards for training, experience, and competence of credit analysts.

The following SEC staff contributed to the examinations and reports:  Diane Audino, David Bobillot, Sondra Boddie, Rita Bolger, Patrick Boyle, Roseann Catania, Matthew Chan, Leah Clague, Kristin Costello, Doreen Crawford, Scott Davey, Franco Destro, Ilya Fradkin, Kenneth Godwin, Michael Gonzalez, Natalia Kaden, Julia Kiel, Russell Long, Matt Middleton, David Nicolardi, Sam Nikoomanesh, Kevin O’Neill, Harriet Orol, Abraham Putney, Jeremiah Roberts, Mary Ryan, Charles Schiller, Andrew Smith, Alexa Strear, Warren Tong, Evelyn Tuntono, Chris Valtin, Kevin Vasel, Andrew Vita, and Michele Wilham.


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