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Statement on Removing References of Credit Ratings from Regulation M

June 7, 2023

Today, the Commission is considering adopting a set of final rules to remove references to credit ratings from Rules 101 and 102 of Regulation M (Reg M). I am pleased to support these rules because they will fulfill an important mandate issued by Congress in the wake of the 2008 financial crisis.

In Section 939A of the Dodd-Frank Act of 2010, Congress directed federal agencies, including the SEC, “to remove any reference to or requirement of reliance on credit ratings” from our rules and to substitute an appropriate standard for credit-worthiness.[1]

This adoption will be the sixth and final of the SEC’s rulemakings to implement this mandate. The other five were finalized between 2011 and 2015, and today’s will get the job done.[2] Further, it comes after three proposals—in 2008, 2011, and most recently in 2022—that we reach today’s adoption. Guess you can say the third time is the charm.

Reg M, a 27-year old rule, prohibits parties involved in the distribution of securities from buying the securities or inducing others to buy the securities during a restricted period. Within Reg M are Rules 101 and 102, which restrict the ability of certain offering participants to transact in ways that can influence the price of the security before their participation in the distribution is deemed complete. Rules 101 and 102 currently have an exception for investment-grade securities.[3]

To fulfill Congress’s mandate, today’s adoption will modify or replace these exceptions with alternative standards of creditworthiness for three kinds of investment-grade securities.

For asset-backed securities, the new exceptions will apply to securities offered pursuant to an effective shelf registration statement filed on the Commission’s Form SF-3.

For nonconvertible securities, both debt and preferred, the new exceptions will apply to the securities of issuers whose probability of default falls below a certain threshold.

This final rule fulfills Congress’s wishes, ensuring we don’t embed in our ruleset a reliance on credit ratings—and instead have appropriate alternative measures of creditworthiness.

[1] SeeSection 939A(b) of the Dodd-Frank Act,available at

[2] See Securities and Exchange Commission: “Dodd-Frank Implementation: Section 939A” (July 16, 2015), available at

[3] This applies to investment-grade nonconvertible debt securities, nonconvertible preferred securities, and asset-backed securities.

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