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January 19, 2023

Consumer Protection Advocates Call on SEC to Increase Transparency and Accountability of Credit Rating Agencies

WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist, issued the following statement on a joint petition sent to the U.S. Securities and Exchange Commission (SEC) urging the agency to clarify its policies on credit rating agencies:

“The fact is that powerful conflicts of interest continue to influence the credit rating agencies, as they seek to attract and retain business from the companies and other issuers that rely on them when seeking investment dollars from the public. While the SEC has implemented a number of reforms in the Dodd-Frank Act governing credit rating agencies, important work remains to be done.  The petition we joined calls on the SEC to clarify its policies on three issues to increase transparency and accountability in the crediting rating industry.

“First, it’s time for the SEC to identify the firms that violate the law when the Office of Credit Ratings issues its annual exam reports. That will help deter misconduct and allow investors to decide for themselves which rating agencies they should trust.  Second, the SEC should make clear that the credit rating agencies are liable under Section 11 of the Securities Act of 1933 for misleading credit ratings appearing in registration statements and prospectuses. Only with such accountability will the rating agencies be sufficiently  deterred from violating the law and producing unreliable ratings.

“Finally, the SEC should at least remove the uncertainty surrounding the application of Regulation ‘Fair Disclosure’ to the rating agencies.  Regulation FD provides that when an issuer privately discloses material nonpublic information to certain persons, the issuer must also disclose that information to the broader  public. In Dodd-Frank, Congress instructed the SEC to eliminate an exemption placing credit rating agencies outside the scope of the rule, but it’s far from clear that this reform has actually been implemented.  In hopes of facilitating action by the SEC, the petition seeks these clarifications through policy statements from the SEC, not rulemakings.

“These and other measures are necessary to help reform the credit rating industry as Congress intended in the aftermath of the financial crisis.  We know that credit rating agencies can play an important role in helping investors decide where to allocate their funds, but it’s also clear that they were key enablers of the financial crisis.  That’s why finishing the reform process is so important.

“We were pleased to join with other prominent public interest advocates in the petition and we look forward to the SEC’s response.”

You can find the petition here.


Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit

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