On July 1, 2008, the Securities and Exchange Commission (the “SEC”) issued three rule proposals (the “Proposed
Rules”) aimed at responding to ongoing concerns regarding the role and importance of credit ratings issued by
nationally recognized statistical rating organizations (“NRSROs”). The Proposed Rules are intended to address
the SEC’s concern that the inclusion of credit ratings throughout its rules and regulations may have acted as a
regulatory “seal of approval” for the ratings such that market participants may have placed “undue reliance” upon
them. The proposed amendments would eliminate references to these ratings in numerous SEC rules and forms.1
The Proposed Rules follow, and are a companion to, the issuance on June 16, 2008 of proposed rules to increase
transparency of and avoid conflicts of interest in the credit rating process (the “NRSRO Proposals”2 and, together
with the Proposed Rules, the “Proposals”).3 A copy of our July 2, 2008 client alert on the NRSRO Proposals, SEC
Proposes Reforms Relating to Credit Rating Agencies, can be found at
http://www.mofo.com/news/updates/files/080702CreditAgencies.pdf.
As drafted, the Proposals would have a significant impact on how market participants use credit ratings during the
new issuance process, in determining investment suitability, for computing net capital requirements and in
complying with other SEC rules and regulations. They also would impact the NRSRO regulatory regime and how
NRSROs interact with market participants and other credit rating agencies. Below we review more closely how
the Proposals would impact the asset-backed market.
See full legal news bulletin for more information.
Please see full publication below for more information.