Abstract
Chapter 3 dealt with the self-regulation of credit rating agencies (CRAs) based on their own codes of conduct supplemented by the International Organization of Securities Commissions (IOSCO) Code. “The ‘worldwide credit crisis’ has thrust credit rating agencies into the spotlight, with attention focused on their ratings of novel structured finance products”. “Policymakers have undertaken a number of initiatives intended to address perceived problems with such ratings – enhancing competition, promoting transparency, reducing conflicts of interest, and reducing ratings-dependent regulation”. This chapter will examine additional statutory reforms that were necessary to adjust shortcomings to ensure CRAs do act as responsible gatekeepers. In this regard, this chapter will focus on two important statutory regulations introduced in the US. Section 4.2 will analyse the provisions of the Credit Rating Agency Reform Act 2006 (Reform Act). Section 4.3 will analyse the provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 (Dodd-Frank), and the assessment of these regulations appears in Sect. 4.4.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Hunt (2009).
- 2.
Ibid.
- 3.
Nazareth (2003).
- 4.
SEC Concept Release No. 33-8236 (2003), p. 1.
- 5.
Carroll (2005).
- 6.
Section 702(b).
- 7.
Cox (2008).
- 8.
Stevens (2005), p. 1.
- 9.
Ibid.
- 10.
U.S. Securities and Exchange Commission, “The SEC’s Role Regarding and Oversight of National Recognised Statistical Rating Organisation (NRSROs), Report No. 458 (27 August 2009)” at i. http://www.sec-oig.gov/Reports/AuditsInspections/2009/Report458.pdf.
- 11.
Nazareth (2003).
- 12.
Under the Commission’s net capital rule for broker-dealers, Rule 15c3-1 under the Exchange Act (the “Net Capital Rule”).
- 13.
Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws (2003).
- 14.
“‘No-action’ process [is] a mechanism permitting the public and practitioners to obtain the informal views of the SEC staff on proposed transactions that appear to raise compliance issues under applicable federal securities laws and the rules thereunder”. See Lemke (1986–1987), p. 1019.
- 15.
Net capital rule is Securities and Exchange Commission rule that requires all broker/dealers to maintain no more than a 15-to-1 ratio between indebtedness and liquid assets. Akins and Calabria (2012).
- 16.
SEC, “Definition of NRSRO”, http://www.sec.gov/rules/proposed/33-8570.pdf, pp. 8–10. See also Kotz (2010).
- 17.
Gannon Jr. (2011–2012), pp. 1015–1051. http://www.bu.edu/law/central/jd/organizations/journals/banking/archives/documents/volume31/HelpCreditRatingAgencies.pdf.
- 18.
SEC Concept Release No. 33-8236 (2003).
- 19.
Egan-Jones Ratings Company points out several failures of the Big Three CRAs. http://www.sec.gov/news/extra/credrate/eganjones2.htm.
- 20.
Cox (2008).
- 21.
U.S. Securities and Exchange Commission (2009), p. ii.
- 22.
Baker (Committee Chairman) (2005).
- 23.
A. Haynes, University of Wolverhampton, discussion (21 February 2012).
- 24.
U.S. SEC (2009) at ii.
- 25.
Soucy (2010).
- 26.
“Total money market mutual funds rise by $7.45 billion in latest week: ICI”, Reuters (12 December 2013). http://www.reuters.com/article/2013/12/12/us-total-money-market-idUSBRE9BB18E20131212.
- 27.
P.S. Stevens, President Investment Company Institute, Statement on H.R. 2990, the Credit Rating Agency Duopoly Relief Act of 2005 Before the Committee on Financial Services United States House of Representatives (29 November 2005). http://www.idc.org/policy/ici_testimony/ci.05_house_nrsro_tmny.idc.
- 28.
Ibid.
- 29.
Ibid.
- 30.
Bai submits, “conflicts of interest are perceived as a major problem plaguing the credit rating industry”, Bai (2010), p. 253 at 312. http://dev.nyujlpp.org/wp-content/uploads/2012/11/Lynn-Bai-On-Regulating-Conflicts-of-Interest-in-the-Credit-Rating-Industry.pdf; on how conflicts of interest can be addressed, see Aguilar; Deb and Murphy (2009).
- 31.
Cox (2008).
- 32.
See Soucy (2010).
- 33.
Credit rating Agencies Duopoly Relief Act of 2006 H.R. 2990 (109th). This bill was introduced in Congress and was passed by the House on 12 July 2006 but was never passed by the Senate.
- 34.
Section 4 (ii) Ibid.
- 35.
Griffin et al. (2012).
- 36.
Long (2013).
- 37.
Lucchetti and Ng (2010).
- 38.
U.S. Securities and Exchange Commission (2003). http://www.sec.gov/news/studies/credratingreport0103.pdf.
- 39.
Adoption of Amendments to Rule 15c3-1 and Adoption of Alternative Net Capital Requirement for Certain Brokers and Dealers”, Exchange Act Release 34-11497 of June 26, 1975; 40 F.R. 29795 of 16 July 1975.
- 40.
Findings under Section 2(6) of the Reform Act.
- 41.
Elkhoury (2008), p. 4.
- 42.
A. Haynes, University of Wolverhampton, Discussion (21 February 2012).
- 43.
Cox (2008).
- 44.
This was done as a member of the President’s Working Group on Financial Markets; see http://www.law.du.edu/images/uploads/presidents-working-group.pdf.
- 45.
Cox (2008).
- 46.
Ibid.
- 47.
Ibid.
- 48.
P. L. Green “Features: Rating Agencies On Watch” (1 March 2003) http://www.gfmag.com/archives/86-86-march-2003/605-features.html#axzz2chrA4myR.
- 49.
Securities and Exchange Commission, “Concept Release: Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws”, https://www.sec.gov/rules/concept/33-8236.htm.
- 50.
Cox (2008).
- 51.
“Oversight of Credit Rating Agencies Registered as Nationally Recognized Statistical Rating Organizations”, Exchange Act Release 34-55857 of June 5, 2007; 72 F.R. 33564 of 18 June 2007.
- 52.
”Amendments to Rules for Nationally Recognized Statistical Rating Organization”, Exchange Act Release 34-59342 of 2 February 2009; 74 F.R. 6456 of 9 February 2009.
- 53.
For a history of Moody’s, see Langohr and Langohr (2008), pp. 394–398.
- 54.
Senate Report Number 109-326 (2006) at 3.
- 55.
See 17 CFR Part 240, “General Rules and Regulations, Securities Exchange Act of 1934” at 55.
- 56.
Jones (2009).
- 57.
SEC Concept Release No. 33-8236 (2003), p. 1.
- 58.
Section 4(1) (B) of the Reform Act.
- 59.
- 60.
Sinclair (2010).
- 61.
Nazareth (2003).
- 62.
S&P, “Rating Policies and Code of Conduct”, http://www.standardandpoors.com/ratings/code-of-conduct/en/us.
- 63.
“How CRISIL Manages Conflict of Interest”, http://crisil.com/pdf/ratings/how-CRISIL-manages-conflict-of-interest.pdf.
- 64.
See A. M. Best Company Inc. (2011).
- 65.
Section 4(3) (h) of the Reform Act.
- 66.
Under sub-section (1) of Section 4(3) (h) of the Reform Act.
- 67.
Under sub-section (2) of Section 4(3) (h) of the Reform Act.
- 68.
Deb and Murphy (2009), p. 5.
- 69.
- 70.
For a definition of cartel, see Glossary.
- 71.
- 72.
For a definition of mergers and acquisition, see Glossary.
- 73.
For actions taken by OFT, see “Anti-competitive behaviour under the Enterprise Act”, http://www.out-law.com/page-403.
- 74.
The Act came into force in June 2003.
- 75.
Senate Report Number 109-326 (2006), p. 3.
- 76.
Several CRAs were absorbed by the Big Three: see “Credit Rating Agencies Globally”, http://www.defaultrisk.com/rating_agencies.htm.
- 77.
Competition Commission, “Policy: Institutional Reform” http://www.competition-commission.org.uk/policy#sthash.g1Tc6mGk.dpuf.
- 78.
Grimes and Smith (2013).
- 79.
Section 4 of the Duopoly Act prohibited such acts and practices.
- 80.
Powell and Arregle, p. 2.
- 81.
Wrobel (2013).
- 82.
See Senate Report Number 109-326 (2006) at 6.
- 83.
Exchange Act Rule 15c3.1, see Adoption of Amendments to Rule 15c3-1 and Adoption of an Alternative Net Capital Requirement for Certain Brokers and Dealers, Exchange Act Release No. 11497 (26 June 1975).
- 84.
Roberts (1992).
- 85.
Ibid., p. 5.
- 86.
Nazareth (2005a).
- 87.
Ibid.
- 88.
See Sec. B—Recognition Criteria in EC Concept Release: Rating Agencies and the Use of Credit Ratings under the Federal Securities Laws. http://www.sec.gov/rules/concept/33-8236.htm.
- 89.
A. Pollock (American Enterprise Institute) quoted by Carnahan (2005).
- 90.
SEC Concept Release (2003).
- 91.
SEC “No Action Letters” http://www.sec.gov/answers/noaction.htm.
- 92.
Amy B.R. Lancellotta (Senior Counsel) Letter addressed to J.G. Kutz, “Definition of NRSRO”, Investment Company Institute (9 June 2005) at 1.
- 93.
Nazareth (2005b).
- 94.
Ibid.
- 95.
Ibid.
- 96.
Ibid.
- 97.
See Chap. 2.
- 98.
Nazareth (2005b).
- 99.
Ibid.
- 100.
Nazareth (2003).
- 101.
U.S. Securities and Exchange Commission (2003), p. 32.
- 102.
Nazareth (2003).
- 103.
H.R. 2990 (109th) Credit Rating Agency Duopoly Relief Act of 2006 (the Duopoly Act), https://www.govtrack.us/congress/bills/109/hr2990/text.
- 104.
Section 2(2) (A) of the Duopoly Act 2006.
- 105.
Nazareth (2003), Section 4.
- 106.
Ibid.
- 107.
Ibid.
- 108.
A. Haynes, University of Wolverhampton, email exchanges (21 February 2012).
- 109.
Nazareth (2003).
- 110.
L. J. White, Comments at 2. http://www.sec.gov/rules/proposed/s70405/ljwhite6694.pdf.
- 111.
Ibid.
- 112.
Section 2 of the Reform Act.
- 113.
Baker and Milbourn (2010).
- 114.
SEC Staff Report (2012), p. 5.
- 115.
Tchirp, “What the TF? The SEC, NRSRO, Free Speech, and Lawsuits” TF Market Advisors (2013). http://www.tfmarketadvisors.com/2012/04/25/what-the-tf-the-sec-nrsro-free-speech-and-lawsuits/.
- 116.
Section 6 of the Reform Act.
- 117.
Section 7, Ibid.
- 118.
White (2013).
- 119.
Cox (2008).
- 120.
Senate Report Number 109-326 (2006), pp. 8–9.
- 121.
Commission Announcements –“SEC Penalizes Investment Advisers for Compliance Failures”, SEC News Digest (28 November 2011). See http://www.sec.gov/news/digest/2011/dig112811.htm.
- 122.
11 US District Court and Southern District of New York, Civ. 7387 (JSR) 2011; No. 11 Civ.7 7387, 2011 WL 5903733, (S.D.N.Y. November 28, 2011).
- 123.
“SEC v. Citigroup Global Markets Inc.” http://law.justia.com/cases/federal/appellate-courts/ca2/11-5227/11-5227-2012-03-15.html.
- 124.
United States Securities & Exchange Commission v. Citigroup Global Markets Inc. 5 Docket Nos. 11-5227-cv (Lead) 11-5375-cv (Con) 11-5242-cv (XAP) (Submitted: January 17, 2012 Decided: March 15, 2012), http://docs.justia.com/cases/federal/appellate-courts/ca2/11-5227/11-5227-2012-03-15.pdf.
- 125.
Official Journal of the European Union, “Commission Delegated Regulation (EU) No 946/2012 of 12 July 2012” (16.10.2012) L 282/23. http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2012:282:0023:0026:en:PDF.
- 126.
Senate Report Number 109-326 (2006) at 9.
- 127.
ESMA (2010).
- 128.
See “Credit Rating Agencies Globally”. http://www.defaultrisk.com/rating_agencies.htm.
- 129.
See Jeon and Lovo (2011).
- 130.
See “Credit Rating Agencies Globally”, http://www.defaultrisk.com/rating_agencies.htm.
- 131.
Becker and Milbourn (2009). See also HBS Working Paper.
- 132.
Letter written to the SEC on 25 July 2003 dealing with Rating Agencies and the Use of Credit Ratings Under the Federal Securities Laws. See http://www.sec.gov/rules/concept/s71203/aflight072503.htm.
- 133.
Ibid.
- 134.
Financial Times (2010).
- 135.
J. G. Jones of KPMG in an interview with the Financial Times, see Shah (2010).
- 136.
Namely, Deloitte (Revenue $32.4 billion), PwC (Revenue $32.1 billion), Ernst & Young (Revenue $25.8 billion) and KPMG (Revenue $23.4 billion) See “Big Four (audit firms)” http://en.wikipedia.org/wiki/Big_Four_%28audit_firms%29.
- 137.
Salzedo and Singla (2015).
- 138.
Listokin and Taibleson (2010).
- 139.
Ibid., p. 94.
- 140.
Ibid.
- 141.
Ibid., p. 95.
- 142.
Pinset Masons, “Insider dealing”, http://www.out-law.com/page-11115; see also Clarke (2013) and Dubow and Monteiro (2006).
- 143.
Hsiao (2011), p. 5.
- 144.
Ibid.
- 145.
President B. Obama, http://www.nytimes.com/2011/07/19/business/dodd-frank-under-fire-a-year-later.html.
- 146.
Dragan et al. (2010).
- 147.
Birger (2008).
- 148.
Wayne (2009).
- 149.
“Moody’s Corporation Reports Results for First Quarter 2007” (25 April 2007). http://ir.moodys.com/releasedetail.cfm?ReleaseID=288634.
- 150.
Labonte (2013), p. 2.
- 151.
The New York Times (4 November 2011).
- 152.
Nolan et al. (2010), para 1.
- 153.
Section 931 (1) Dodd-Frank Act.
- 154.
Dodd-Frank Act Sec. 931(1), Moynihan et al. (2010).
- 155.
McLean and Nocera (2010), p. 111.
- 156.
“Conclusions of the Financial Crisis Inquiry Commission” (January 2010) at xxv. http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_conclusions.pdf.
- 157.
Ibid., p. xxvii.
- 158.
Fernicola and Goldstein (2010).
- 159.
See Chap. 2.
- 160.
Securities and Exchange Commission. “Final Rule” http://www.sec.gov/rules/final/2009/33-9089.pdf.
- 161.
Moynihan et al. (2010).
- 162.
See “Subtitle C – Improvements to the Regulation of Credit Rating Agencies and Section 931 Findings”. http://www.gpo.gov/fdsys/pkg/BILLS-111hr4173enr/pdf/BILLS-111hr4173enr.pdf.
- 163.
Congress finding under the Dodd-Frank Act, http://www.gpo.gov/fdsys/pkg/BILLS-111hr4173enr/pdf/BILLS-111hr4173enr.pdf.
- 164.
Dodd-Frank Bill at 821 Cl (2). http://banking.senate.gov/public/_files/ChairmansMark31510AYO10306_xmlFinancialReformLegislationBill.pdf.
- 165.
Ibid.
- 166.
Walter and Daigler (2010).
- 167.
Walter and Daigler (2010).
- 168.
Section 931 (1) Dodd-Frank Act, sub-secs (1) to (4) H.R. 4173 at 497.
- 169.
Section 931 (1) at 497.
- 170.
SEC, “Credit Rating Agencies”, http://www.sec.gov/spotlight/dodd-frank/creditratingagencies.shtml.
- 171.
Financial Stability Board (2013).
- 172.
See Chapter 16, 12 USC § 1811.
- 173.
As Amended through P. L. 112-90, approved on January 3, 2012.
- 174.
SEC, “Security Rating – Final Rules”, http://www.sec.gov/rules/final/2011/33-9245.pdf.
- 175.
The FSB has been established to coordinate at the international level the work of national financial authorities and international standard-setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. http://www.financialstabilityboard.org/.
- 176.
Financial Stability Board (2013), fn. 171.
- 177.
Hill (2010), p. 133 at 145.
- 178.
Walter and Daigler (2010).
- 179.
Section 931 (1) Dodd-Frank Act, Subsections (1) to (4) H.R. 4173 at 497.
- 180.
Section 932 (2) at 497.
- 181.
Section 931 (4) Subtitle C.
- 182.
“Securities Exchange Act of 1934”. http://www.sec.gov/about/laws/sea34.pdf.
- 183.
Section 931 (2) and (3) of the Dodd-Frank Act. See also Moynihan et al. (2010).
- 184.
See accountability under Section 15E (m) of the Securities Exchange Act 1934.
- 185.
Moynihan et al. (2010).
- 186.
Fernicola and Goldstein (2010), p. 74–75.
- 187.
Stafford et al. (2010).
- 188.
Fernicola and Goldstein (2010).
- 189.
Fight (2003).
- 190.
For a brief summary of this, see DechertOnPoint, “Dodd-Frank Measures Affecting Credit Rating Agencies”, Issue 35 (August 2010).
- 191.
Dodd-Frank Act S932 (q)(1)(2)(A)(B) at 1898.
- 192.
S932 (q) (1)(2) and (F) at 1898.
- 193.
S932 (q) (3)(A)(B)and (C) at 1879.
- 194.
S932 (s) (1)(A)(i)(ii) and (iii) pp. 1879–1880.
- 195.
S938 (a) (2) and (3) at 1885.
- 196.
S938 (r)(A) and (C) at 1879.
- 197.
SEC (2012), pp. 2–5.
- 198.
Fernicola and Goldstein (2010).
- 199.
Dodd Frank Act (s) (2) (A) and (B) at 1880.
- 200.
Dodd Frank Act (s) (A) (iv) (I) (II) and (v) at 1880.
- 201.
M. L. Schapiro quoted in “SEC Approves New Rules Regulating Asset-Backed Securities” (20 January 2011) http://www.sec.gov/news/press/2011/2011-18.htm.
- 202.
Section 943 at 1897.
- 203.
SEC, “Disclosure for Asset-Backed Securities Required by Section 943 of The Dodd-Frank Wall Street Reform and Consumer Protection Act” (28 March 2011). http://www.sec.gov/rules/final/2011/33-9175.pdf.
- 204.
H. L. Schapiro (2011), note 204.
- 205.
“SEC Proposes Rules to Increase Transparency and Improve Integrity of Credit Ratings” (18 May 2011). http://www.sec.gov/news/press/2011/2011-113.htm.
- 206.
Fernicola and Goldstein (2010).
- 207.
Section 939B of Dodd-Frank. See Fernicola and Kanter (2010), para 2.
- 208.
Jorion et al. (2005), p. 309.
- 209.
Ibid.
- 210.
Ibid.
- 211.
Quinlivan (2010).
- 212.
Fitch Releases Market Letter with Perspectives on Implementing Dodd-Frank Act (23 July 2010).
- 213.
“Repeal of Credit Ratings Agency Exemption from Regulation FD” (11 October 2010). http://www.gibsondunn.com/publications/pages/RepealOfCreditRatingsAgencyExemptionFromRegFD.aspx.
- 214.
See Fitch Releases Market Letter with Perspectives on Implementing Dodd-Frank Act (23 July 2010).
- 215.
Rule 17g-5 (a) (3) of the Securities Exchange Act 1934.
- 216.
“Dodd-Frank Wall Street Reform and Consumer Protection Act: Credit Rating Agency Provisions”, Financial Markets Alert.
- 217.
Section 939 (g) (3)(A) of the Dodd-Frank Act 2010.
- 218.
Section 939 (g) (3) (B) in Ibid.
- 219.
SEC.
- 220.
SEC (2013).
- 221.
Ibid.
- 222.
Ibid.
- 223.
Sec 932 (p) (1) of Dodd-Frank Act.
- 224.
Section (p) (1) (3) (A) of Dodd-Frank Act. See also Moynihan et al. (2010).
- 225.
Ibid.
- 226.
As per Sec. 939 of the Dodd-Frank Act.
- 227.
SEC, “Credit Rating Agencies”, http://www.sec.gov/spotlight/dodd-frank/creditratingagencies.shtml.
- 228.
Moynihan et al. (2010).
- 229.
“Nationally Recognized Statistical Rating Organizations (NRSROs)”, https://www.sec.gov/divisions/marketreg/ratingagency.htm.
- 230.
Pub.L. 76–768.
- 231.
Section 939F of Subtitle C of Dodd-Frank.
- 232.
Bansal (2013).
- 233.
Section 939F.
- 234.
Subtitle D of Title IX of Dodd-Frank Act—“Improvements to the Asset-Backed Securitization Process”.
- 235.
Section 943 of the Dodd-Frank Act.
- 236.
SEC, “Annual Reports of NRSROs” (March 2012) at 5. https://www.sec.gov/divisions/marketreg/ratingagency/nrsroannrep0312.pdf.
- 237.
Stafford et al. (2010).
- 238.
Ibid.
- 239.
Dodd-Frank Act 2010. Sec. 939C.
- 240.
Dodd-Frank Act 2010 Sec. 939D.
- 241.
Dodd-Frank Act 2010.Sec. 939C.
- 242.
Boggs et al. (2011), p. 53. http://www.hblr.org/wp-content/uploads/2011/07/Boggs-Foxman-Nahill-Growing-Pains.pdf.
- 243.
Press Release, Representative Barney Frank (2011).
- 244.
Indiviglio (2010).
- 245.
- 246.
Press Release, Securities and Exchange Commission (2011).
- 247.
U.S. Government Accountability Office (2011).
- 248.
S. Bachus (House Financial Services Committee Chairman) referred to GAO, quoted by Schroeder (2011).
- 249.
Boggs et al. (2011).
- 250.
M. Miller (the U.S. Treasury Department’s Assistant Secretary for Financial Markets) quoted by Hopkins and Katz (2011).
- 251.
A. M. Best (2010).
- 252.
Ibid.
- 253.
Gorman (2010).
- 254.
Dodd Frank Act s 932 (2) at 1874.
- 255.
Dragan et al. (2010).
- 256.
The CFPB consolidates most Federal consumer financial protection authority in one place. The consumer bureau is focused on one goal: watching out for American consumers in the market for consumer financial products and services. http://www.consumerfinance.gov/the-bureau/creatingthebureau/.
- 257.
Report: Wall Street’s Opposition to Dodd-Frank Reforms Echoes Its Resistance to New Deal Financial Safeguards (2011).
- 258.
The New York Times (4 November 2011). http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html?inline=nyt-classifier.
- 259.
Ibid.
- 260.
Section 931 (3) of the Dodd-Frank Act.
- 261.
Dragan et al. (2010).
- 262.
Dragan et al. (2010).
- 263.
See Testimony on Oversight of SEC by Chair White (Chair) (2013).
- 264.
Ibid.
- 265.
Ibid.
- 266.
Testimony of White (2013).
- 267.
Schwarcz (2011–2012), p. 591 at 599.
- 268.
Dibadj (2011–2012), p. 79.
- 269.
Bradford (2011–2012), p. 290.
- 270.
Bradford (2011–2012), p. 290.
- 271.
Chaffee (2010–2011), pp. 1431–1433.
- 272.
Ibid.
- 273.
Ibid.
- 274.
McNamara (2012), p. 665.
- 275.
Ibid.
- 276.
Fernicola and Goldstein (2010), p. 73.
- 277.
McNamara (2012), p. 665.
- 278.
SEC (2013).
- 279.
Taylor (2010).
- 280.
References
Aguilar, L. A. (2013, May 25). Addressing conflicts of interest in the credit ratings industry. http://www.sec.gov/News/Speech/Detail/Speech/1365171515642#.UhibRNLVAXI.
Akins, E. M., & Calabria, M. A. (2012). Regulation, market structure, and role of the credit rating agencies. Policy Analysis, 704, 1–35.
Bai, L. (2010). On regulating conflicts of interest in the credit rating industry. NYU Journal of Legislation and Public Policy, 13, 253.
Baker (Committee Chairman). (2005, June 29). Legislative solution for the rating agencies duopoly. http://www.access.gpo.gov/congress/house/pdf/109hrg/26274.pdf.
Baker, B., & Milbourn, T. (2010, November 3). How did increased competition affect credit ratings? (Working Paper). Harvard Business School. http://hbswk.hbs.edu/item/6517.html.
Bansal, M. (2013, May 26). Rating agency reform – An alternative for the Franken Amendment. http://seekingalpha.com/article/1461911-rating-agency-reform-an-alternative-for-the-franken-amendment.
Becker, B., & Milbourn, T. (2009, August 30). Why competition may not improve credit rating agencies. Harvard Business School. http://hbswk.hbs.edu/item/6260.html.
A. M. Best. (2010, July 23). Fitch express deep concerns over the impact of Dodd-Frank on the ratings game. http://www.reactionsnet.com/Article/2636997/AM-Best-Fitch-express-deep-concerns-over-the-impact-of-Dodd-Frank-on-the-ratings-game.html.
A. M. Best Company, Inc. (2011). Confidentiality, firewall, conflicts of interest, and securities trading and reporting policy. Policy C-5 (Revised 1 January 2011). http://www.ambest.com/nrsro/confidentialityfirewallconflictsofinterestandsecuritiestradingandreportpolicy_c-5.pdf.
Birger, J. (2008, August 6). The woman who called Wall Street’s meltdown. Fortune Magazine. http://money.cnn.com/2008/08/04/magazines/fortune/whitney_feature.fortune/index.htm.
Boggs, J. C., Foxman, M., & Nahill, K. (2011). Dodd-Frank at one year: Growing pains. Harvard Business Law Review Online, 2, 52. http://www.hblr.org/?p=1614.
Bradford, A. (2011–2012). Is statutorily required that the buck stops here: Risk retention requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act. DePaul Business & Commercial Law Journal, 10, 267.
Carnahan, I. (2005, January 26). AAA-rated oligopoly. Forbes. http://www.forbes.com/2005/01/26/cz_ic_0126beltway.html.
Carroll, B. (2005, September 26). Enron scandals spur proposed credit rating legislation. The Legal Intelligencer. http://securities.stanford.edu/news-archive/2005/20050926_Headline100915_Carroll.html.
Chaffee, E. C. (2010–2011). The Dodd-Frank Wall Street Reform and Consumer Protection Act: A failed vision for increasing consumer protection and heightening corporate responsibility in international financial transactions. American University Law Review, 60, 1431.
Clarke, S. (2013). Insider dealing – Law and practice. Oxford: OUP.
Cox, C. (2008, April 22). ‘Testimony concerning oversight of nationally recognized statistical rating organizations’ before the U.S. Senate Committee on Banking, Housing and Urban Affairs. http://www.sec.gov/news/testimony/2008/ts042208cc.htm.
Deb, P., & Murphy, G. (2009, November). Credit rating agencies: An alternative model (p. 5). http://personal.lse.ac.uk/debp/Papers/Ratings_Regulation.pdf.
Dibadj, R. (2011–2012). Dodd-Frank: Toward first principles? Chapman Law Review, 15, 79.
Dragan, G., Grossman, S., Rangnekar, A., & Yadav, N. (2010, November 29). Dodd-Frank and ratings agencies. http://picker.typepad.com/legal_infrastructure_of_b/2010/11/dodd-frank-and-ratings-agencies.html.
Dubow, B., & Monteiro, N. (2006). FSA publishes measure of scale of market abuse (FSA Occasional Paper 23).
Elkhoury, M. (2008, January). Credit rating agencies and their potential impact on developing countries. No. 186 (p. 4). http://unctad.org/en/Docs/osgdp20081_en.pdf.
ESMA. (2010, March 18). Credit Rating Agencies Annual Report 2012. Application of the Regulation (EC) No 1060/2009 as amended according to Article 21(5). http://www.esma.europa.eu/system/files/2013-308.pdf.
Fernicola, G. A., & Goldstein, J. B. (2010, July 9). “Credit Rating Agencies” Skadden Commentary on the Dodd-Frank Act. http://www.skadden.com/Index.cfm?contentID=51&itemID=2135.
Fernicola, G. A., & Kanter, S. J. (2010, October 1). SEC issues final rule release: Removal from regulation FD of the exemption for credit rating agencies. http://www.skadden.com/insights/sec-issues-final-rule-release-removal-regulation-fd-exemption-credit-rating-agencies.
Fight, A. (2003, July 25). Rating agencies and the use of credit ratings under the federal securities laws. Letter to SEC. http://www.sec.gov/rules/concept/s71203/aflight072503.htm.
Financial Times (2010, May 17). KPMG and PwC eye rating move. http://www.ft.com/cms/s/0/5ffc65b4-614c-11df-9bf0-00144feab49a.html#axzz2e11Uc6Z6.
Financial Stability Board. (2013, August 29). Credit rating agencies reducing reliance and strengthening oversight. Progress report to the St Petersburg G20 Summit. http://www.financialstabilityboard.org/publications/r_130829d.pdf.
Fitch Releases Market Letter with Perspectives on Implementing Dodd-Frank Act (23 July 2010). http://www.businesswire.com/news/home/20100723005925/en/Fitch-Releases-Market-Letter-Perspectives-Implementing-Dodd-Frank.
Gannon, J. T. Jr. (2011–2012). Let’s help the credit rating agencies get it right: A simple way to alleviate a flawed industry model. Annual Review of Banking & Financial Law, 31(1), 1015–1051.
Gorman, T. O. (2010, August 25). Dodd – Frank: Credit rating agencies, Part II. http://www.lexisnexis.com/COMMUNITY/CORPSEC/blogs/corporateandsecuritieslawblog/archive/2010/08/25/dodd-frank-credit-rating-agencies-part-ii.aspx.
Griffin, J. M., Nickerson, J., & Tang, D.Y. (2012, May 25). Rating shopping or catering? An examination of the response to competitive pressure for CDO credit ratings. Abstract. http://www.sec.gov/divisions/riskfin/seminar/tang061412.pdf.
Grimes, R. D., & Smith, L. R. (2013, September 4). United States: Shareholder lawsuit filed against news corp. over antitrust claims and liabilities. http://www.bassberry.com/shareholder-lawsuit-filed-against-news-corp-over-antitrust-claims-and-liabilities-06-19-2013/.
Hamel, G. (n.d.). Strengths & weaknesses of pure competition in economics. http://smallbusiness.chron.com/strengths-weaknesses-pure-competition-economics-37245.html.
HBS Working Paper. Reputation and competition: evidence from the credit rating industry. http://www.hbs.edu/faculty/Publication%20Files/09-051_13e0275c-a3a4-48bd-a86a-2324d5d70b57.pdf.
Hill, C. A. (2010). Limits of Dodd-Frank’s rating agency reform. Chapman Law Review, 15, 133.
Hopkins, C., & Katz, I. (2011, July 13). Treasury’s miller warns against “Scaling Back” major parts of Dodd-Frank. Bloomberg. http://www.bloomberg.com/news/2011-07-13/treasury-s-miller-warns-against-efforts-to-change-dodd-frank-act.html.
House Financial Services Committee. One Year Later: The Consequences of the Dodd-Frank Act. http://financialservices.house.gov/UploadedFiles/FinancialServices-DoddFrank-REPORT.pdf.
Hsiao, M. (2011). International banking and finance laws: Principles and regulations (p. 5). Hong Kong: Sweet & Maxwell Asia Ltd.
Hunt, J. P. (2009). Credit rating agencies and the worldwide “Credit Crisis”: The limits of reputation, the insufficiency of reform, and a proposal for improvement. Columbia Business Law Review, 109–209. http://www2.wiwi.hu-berlin.de/finanz/skript_semfin/t12.pdf; http://works.bepress.com/john_hunt/1.
Indiviglio, D. (2010, June 30). Dodd-Frank’s derivatives rules could cost main street $1 trillion. The Atlantic. http://www.theatlantic.com/business/archive/2010/06/dodd-franks-derivatives-rules-could-cost-main-street-1-trillion/58989/.
Jeon, D.-S., & Lovo, S. (2011, May 10). Natural barrier to entry in the credit rating industry. http://ssrn.com/abstract=1695519.
Jones, A. (2009, April 21). A first amendment defense for the rating agencies. The Wall Street Journal. http://blogs.wsj.com/law/2009/04/21/a-first-amendment-defense-for-the-rating-agencies/.
Jorion, P., Liu, Z., & Shi, C. (2005). Informational effects of regulation FD: Evidence from rating agencies. Journal of Financial Economics, 76(2), 309–330.
Kotz, H. D. (2010). SEC’s role regarding and oversight of nationally recognized statistical rating organizations (NRSROs). Collingdale, US: DIANE Publishing.
Labonte, M. (2013, July 30). Systemically important or “Too Big to Fail” financial institutions. http://www.fas.org/sgp/crs/misc/R42150.pdf.
Langohr, H., & Langohr, P. (2008). The Raison d’Etr of credit ratings and their markets (Chapter 3). In H. Langohr & P. Langohr (Eds.), The rating agencies and their credit ratings: What they are, how they work and why they are relevant (pp. 89–125). Chichester: Wiley.
Lemke, T. P. (1986–1987). The SEC no-action letter process. Business Lawyer, 42, 1019.
Listokin, Y., & Taibleson, B. (2010). If you misrate, then you lose: Improving credit rating accuracy through incentive compensation. Faculty Scholarship Series (Paper 3877, p. 94). http://digitalcommons.law.yale.edu/fss_papers/3877.
Long, C. (2013, May 13). Should asset backed securities be outlawed? Reuters. http://blogs.reuters.com/muniland/tag/credit-ratings/.
Lucchetti, A., & Ng, S. (2010, February 19). “Rating Shopping” lives on as congress debates on fix. The Wall Street Journal. http://online.wsj.com/news/articles/SB10001424052748703315404575250270972715804.
McLean, B., & Nocera, J. (2010). All the devils are here: The hidden history of the financial crisis. New York/London.
McNamara, S. R. (2012). Informational failures in structured finance and Dodd-Frank’s “Improvements to the Regulation of Credit Rating Agencies”. Fordham Journal of Corporate & Financial Law, 17(3), 665.
Moynihan, M. C., Nolan, A. R. G., Pagnano, C. E., & Williamson, G. A. (2010, July 22). Financial reform bill strengthens regulation, expands potential liability of credit rating agencies. Investment Management Alert.
Nazareth, A. L. (2003, April 2). ‘Testimony concerning rating the rating agencies: The state of transparency and competition’ before the house subcommittee on capital markets, insurance, and government sponsored enterprises. Committee on Financial Services. http://www.sec.gov/news/testimony/ts040203aln.htm.
Nazareth, A. L. (2005a, April 12). Director, Division of Market Regulation, U.S. Securities & Exchange Commission, Statement before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises, Committee on Financial Services. http://www.sec.gov/news/testimony/ts041205aln.htm
Nazareth, A. L. (2005b, April 12). Testimony concerning credit rating agencies. https://www.sec.gov/news/testimony/ts041205aln.htm.
Nolan, A. R. G., Pagnano, C. E., Moynihan, M., & Williamson, G. A. (2010, July 22). Financial reform bill strengthens regulation, expands potential liability of credit rating agencies. http://m.klgates.com/financial-reform-bill-strengthens-regulation-expands-potential-liability-of-credit-rating-agencies-07-22-2010/.
Powell, T. C., & Arregle, J.-L. (2014, August 8). Firm performance and the axis of errors. Journal of Management Research, 7(2), 59–77. http://thomaspowell.co.uk/article_pdfs/Axis.pdf.
Press Release, Representative Barney Frank. (2011, March 30). Frank statement on the cost of Dodd-Frank implementation. http://democrats.financialservices.house.gov/press/PRArticle.aspx?NewsID=1410.
Press Release, Securities and Exchange Commission. (2011, July 1). SEC provides additional guidance, interim relief and exemptions for security-based swaps under Dodd-Frank Act. http://www.sec.gov/news/press/2011/2011-141.htm.
Quinlivan, S. (2010, October 10). Dealing with rating agencies after regulation FD change (Para 3). http://dodd-frank.com/dealing-with-rating-agencies-after-regulation-fd-change/.
Report: Wall Street’s Opposition to Dodd-Frank Reforms Echoes Its Resistance to New Deal Financial Safeguards’ (12 July 2011). http://www.commondreams.org/newswire/2011/07/12-0.
Roberts, R. Y. Commissioner, U.S. Securities and Exchange Commission Washington, D.C. ‘Formal Regulatory Handle Needed for NRSRO Designation: Part I’, SIA Compliance & Legal Seminar Scottsdale (Vol. 1). Arizona (6 April 1992). http://www.sec.gov/news/speech/1992/040692roberts.pdf.
Salzedo, S., & Singla, T. (2015, April 30). Accountants’ Negligence and Liability. Bloomsbury Professional.
Schroeder, P. (2011, July 13). GAO: “Regulators need more info before curbing proprietary trading.” Financial Times. http://thehill.com/blogs/on-the-money/banking-financial-institutions/171309-gao-regulators-need-more-info-before-curbing-proprietary-trading.
Schwarcz, S. L. (2011–2012). Protecting investors in securitization transactions: Does Dodd-Frank help, or hurt? The 2011 Diane Sanger Memorial Lecture. Louisiana Law Review, 72, 591.
SEC Concept Release No. 33-8236 (2003, June 4). Rating agencies and the use of credit ratings under the federal securities laws (p. 1). http://www.sec.gov/rules/concept/33-8236.htm.
SEC Staff Report. (2012, November). 2012 Summary Report of Commission Staff’s Examinations of Each Nationally Recognized Statistical Rating Organization As Required by Section 15E(p)(3)(C) of the Securities Exchange Act of 1934. http://www.sec.gov/news/studies/2012/nrsro-summary-report-2012.pdf.
SEC. (2012, September). Report to congress credit rating standardization study as required by Section 939(h) of the Dodd-Frank Wall Street Reform and Consumer Protection Act’. http://www.sec.gov/news/studies/2012/939h_credit_rating_standardization.pdf.
SEC. (2013, August 29). Implementing Dodd-Frank Wall Street Reform and Consumer Protection Act – Accomplishments. http://www.sec.gov/spotlight/dodd-frank/accomplishments.shtml; http://www.sec.gov/spotlight/dodd-frank.shtml.
SEC. The Investor’s advocate: How the SEC protects investors, maintains market integrity, and facilitates capital formation. http://www.sec.gov/about/whatwedo.shtml.
Shah, O. (2010, May 17). KPMG and PwC consider move into credit rating. http://www.cityam.com/article/kpmg-and-pwc-consider-move-credit-rating.
Sinclair, T. J. (2010, November). Credit rating agencies and the global financial crisis. Economic Sociology the European electronic newsletter, 12(1), 4–9. http://econsoc.mpifg.de/archive/econ_soc_12-1.pdf.
Soucy, C. (2010, June 6). Credit rating agency reform act. http://www.livestrong.com/article/140584-credit-rating-agency-reform-act/#ixzz1k03NGYX8.
Stafford, T. A., Root, M. D., & Ness, B. I. (2010, August 26). Dodd-Frank measures affecting credit rating agencies. Association of Corporate Counsel. http://www.lexology.com/library/detail.aspx?g=562ad21e-d7e6-439d-8850-f630432be31a.
Stevens, P. S. (2005, November 29). Before the Committee on Financial Services United States House of Representatives (p. 1). http://www.idc.org/policy/ici_testimony/ci.05_house_nrsro_tmny.idc.
Taylor, J. B. (2010, July 1). The Dodd-Frank Financial Fiasco. Wall Street Journal. http://online.wsj.com/article/SB10001424052748703426004575338732174405398.html
Timothy, A. S., Root, M. D., & Ness, B. I. (2010, August 26). Dodd-Frank measures affecting credit rating agencies. Association of Corporate Counsel. http://www.lexology.com/library/detail.aspx?g=562ad21e-d7e6-439d-8850-f630432be31a.
U.S. Government Accountability Office. (2011). GAO-11-529, Proprietary Trading: Regulators Will Need More Comprehensive Information to Fully Monitor Compliance with New Restrictions When Implemented.
U.S. Securities and Exchange Commission. (2003, January). Report on the role and function of credit rating agencies in the operation of the securities markets. As Required by Section 702(b) of the Sarbanes-Oxley Act of 2002. https://www.sec.gov/news/studies/credratingreport0103.pdf.
U.S. Securities and Exchange Commission. (2009, August 27). The SEC’s role regarding and oversight of national recognised statistical rating organisation (NRSROs), Report No. 458. http://www.sec-oig.gov/Reports/AuditsInspections/2009/Report458.pdf.
Walter, E. B., & Daigler, M. A. (2010, June 21). Gatekeepers are the key to good governance. Fobes.com. http://www.forbes.com/2010/06/21/shareholders-risk-gatekeepers-elisse-walter-leadership-governance-ethisphere_print.html.
Wayne, L. (2009, July 15). Clapers Sues over ratings of securities. The New York Times. http://www.nytimes.com/2009/07/15/business/15calpers.html?_r=3&partner=rss&emc=rss&.
White, M. J. (2013, September 26). Deploying the full enforcement arsenal. Speech, Council of Institutional Investors fall conference in Chicago, IL. http://www.sec.gov/News/Speech/Detail/Speech/1370539841202#.
White, M. J. (Chair). (2013, May 16). Testimony on oversight of SEC. U.S. Securities and Exchange Commission, Before the U.S. House of Representatives Committee on Financial Services.
Wrobel, G. A. M. (2013, April 26). A financial crisis is a terrible thing to waste: Challenges in the regulation of credit rating agencies and the use of ratings to regulate capital of financial services firms (BA Thesis for Political Science and Public Policy Studies). The University of Chicago. http://www.sec.gov/comments/4-661/4661-22.pdf.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2015 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Hemraj, M. (2015). US Statutory Regulation. In: Credit Rating Agencies. Springer, Cham. https://doi.org/10.1007/978-3-319-17927-8_4
Download citation
DOI: https://doi.org/10.1007/978-3-319-17927-8_4
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-17926-1
Online ISBN: 978-3-319-17927-8
eBook Packages: Humanities, Social Sciences and LawLaw and Criminology (R0)