The Securities and Exchange Commission (SEC) published its annual report to Congress this week on credit rating agencies.
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The report, conducted by the SEC’s Office of Credit Ratings, discusses the state of competition, transparency, and conflicts of interest, among other issues related to credit ratings agencies, also called nationally recognized statistical rating organizations (NRSROs).
“The oversight of Nationally Recognized Statistical Rating Organizations is critical to the Commission’s focus on investor protection,” SEC Chair Gary Gensler said. “The Office of Credit Ratings’ work and oversight benefits our efforts to protect investors as well as ensure the integrity of the rating process.”
The staff’s NRSRO examinations considered a number of factors, including the NRSRO surveillance of highly leveraged companies that had experienced increased debt service payments due to a sustained rise in interest rates. They also looked at NRSRO ratings on single family rental income securitizations, as well as their use of analytical tools.
“To protect investors, our examinations focus on specific activities of the credit rating agencies to assess whether or not they are compliant with applicable rules and regulations,” Lori Price, director of the Office of Credit Ratings, said. “The staff’s work is summarized in a comprehensive annual report that discusses the findings of our examinations as well as market information about credit rating agencies and the credit rating industry.”
The SEC’s Office of Credit Ratings examines credit rating agencies to promote compliance with federal securities laws and rules by identifying potential instances of non-compliance by credit rating agencies.