On February 9, the Securities and Exchange Commission proposed rules amending the Securities Act of 1933 and the Securities Exchange Act of 1934 to replace rule and form requirements for securities offerings and issuer disclosure rules that rely on, or make special accommodations for, credit ratings to reflect the requirements of Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 939A of the Dodd-Frank Act requires that the SEC (1) review any regulation issued by it that requires the use of an assessment of the credit-worthiness of a security or money market instrument and any references to or requirements in its regulations regarding credit ratings, (2) modify any regulations to remove any reference to or requirement of reliance on credit ratings, and (3) substitute in its regulations a standard of credit-worthiness with alternative requirements. The proposed rules are similar to rules proposed in 2008, which were not adopted by the SEC.

The proposed rules would remove credit ratings as one of the conditions for issuers seeking to use Form S-3 and Form F-3 when registering securities for public sale. The proposed rules would revise Instruction I.B.2 of Form S-3 and Form F-3, which currently permit issuers to register primary offerings of non-convertible securities if they are rated investment grade by at least one nationally recognized statistical rating organization (NRSRO). The revised Instruction I.B.2 would provide that issuers may use Form S-3 or Form F-3 to register an offering of non-convertible securities if the issuer has issued at least $1 billion of non-convertible securities in transactions registered under the Securities Act, other than equity securities, for cash during the past three years. The proposed rules also would...