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U.S. Securities and Exchange Commission

Speech by SEC Commissioner:
Statement at Open Meeting to Adopt a Final Rule Regarding Security Ratings for Forms S-3 and F-3 Eligibility


Commissioner Troy A. Paredes

U.S. Securities and Exchange Commission

Washington, D.C.
July 26, 2011

Thank you, Chairman Schapiro.

Section 939A of the Dodd-Frank Act contemplates the removal of references to credit ratings in rules and forms under the Securities Act and the Exchange Act. The recommendation before us goes toward giving effect to Dodd-Frank.

The most notable aspect of this rulemaking is its potential impact on an issuer’s ability to use Form S-3. Form S-3 is a streamlined “short form” for registering a public offering of securities, and Form S-3 eligible issuers can conduct primary offerings “off the shelf.”

At this rulemaking’s proposing stage, I was uneasy that the rule change might frustrate capital formation by denying certain issuers that could have used Form S-3 the ability to do so. I want to thank the staff for the time and effort you spent engaging the comments and revising the rulemaking to mitigate the risk that the rule amendments would end up shrinking the pool of eligible Form S-3 issuers. Given that the final rule is meaningfully improved as compared to the proposal, I am able to support the recommendation before us today.

The real test of any rule, however, is not how it looks on paper but how it works in practice once it takes effect. Accordingly, I ask that the staff keep apprised of the actual impact of today’s rule change so that appropriate steps can be taken, if warranted, if we learn that the amendments have in fact impeded capital formation, notwithstanding the effort to avoid this unintended result.



Modified: 07/26/2011