Credit Rating Agencies

On June 19, 2012, the Financial Stability Board (“FSB”) issued a progress report to the G20 Leaders on the steps FSB member nations have taken to implement financial reforms designed to improve the stability of the global financial system.  The FSB reviewed, among other things, its members’ Basel implementation, adoption of resolution-planning regimes, oversight of the so-called “shadow banking system,” reform of the OTC derivatives market, and the effectiveness of the FSB itself.  The FSB concluded that its member nations have made significant progress in implementing globally agreed financial reforms, but large strides are still necessary—particularly regarding recovery and resolution planning—to protect the global economy against future financial crises.

What is the FSB?

The FSB is an [click to continue…]

Appearing among the newsletters at the International Law Office website, Weil counsel Erika Weinberg reprises her discussion of how provisions in the Dodd-Frank Act will affect registered offerings of debt securities, as well as how issuers interact with rating agencies going forward.

By Erika Weinberg

The Dodd-Frank Wall Street Reform and Consumer Protection Act1 (“Dodd-Frank”) repealed Rule 436(g) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), thereby eliminating the exemption from the expert consent and liability provisions under the Securities Act for any credit ratings issued by a “nationally recognized statistical rating organization” (an “NRSRO”).  As a result, bond issuers that wish to include – or in the case of issuers of publicly-registered asset-backed securities (“ABS”), that are required to include – ratings information in registration statements/prospectuses (either expressly or by incorporating disclosure in the issuer’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q) will be required to obtain the consent of those rating agencies.  Thus far, the four largest rating agencies have publicly stated that they will not provide such consent.2  Dodd-Frank also eliminates the provision of Regulation FD that protected communications between issuers and rating agencies from the disclosure requirements of Regulation FD.3  These changes will affect registered offerings of debt securities, as well as how issuers interact with rating agencies going forward.

To read the full July 2010 issue of Finance Digest, please click here.

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