The practice of marketing registered public offerings of debt securities with credit ratings information and related disclosure of issuer credit ratings in Securities and Exchange Commission filings will change with the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
One of Dodd-Frank’s many reforms was aimed at credit rating agencies. Effective immediately, Dodd-Frank Section 939G repealed SEC Rule 436(g) promulgated under the Securities Act of 1933. Rule 436(g) stated that in general, credit ratings were not deemed “expertized” portions of registration statements. As non-expertized content, issuers did not need consent from credit rating agencies to use their ratings in registration statements, and credit rating agencies were not subject to strict liability under Section 11 of the Securities Act for the opinion refl ected in their ratings. As providing consents would subject credit ratings agencies to liability under Section 11 of the Securities Act, credit ratings agencies have announced they will not consent to the use of their ratings in registration statements or prospectuses.
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