SEC Office of Credit Ratings ("OCR") Director Jessica Kane highlighted developments in the regulation of nationally recognized statistical rating organizations ("NRSROs") and solicited feedback on current disclosure obligations.

NRSRO Oversight

Ms. Kane described the OCR's oversight of NRSROs. She highlighted:

  • Examinations: The OCR conducts annual exams of the NRSROs and publishes annual exam reports.
  • Monitoring: The OCR monitors trends and developments in the credit rating industry.
  • Legal and Policy: The OCR interprets NRSRO regulations and makes policy and rulemaking recommendations.

Disclosure Considerations

Ms. Kane identified several issues under consideration by the OCR including whether: (i) additional disclosures would result in more informed investment decisions, (ii) there should be more timely NRSRO disclosures on the performance of rated bonds or structured products, and (iii) there should be additional disclosure as to NRSRO methodology.

Specifically, Ms. Kane encouraged public feedback on Exchange Act Rule 17g-5(a)(3) ("Conflicts of Interest") relating to disclosure obligations and the ratings of structured finance products. Ms. Kane requested comment on (i) whether the rule fulfills its intended purpose, (ii) whether NRSROs should be allowed to access 17g-5 website data in order to provide commentaries, (iii) the benefits and burdens of complying with the rule, and (iv) alternative methods to address conflicts of interest.

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