Annual Staff Reports on Credit Rating Agencies Show Improvements
No fraud or misconduct is reported in the SEC staff examinations of nationally recognized statistical rating organizations (NRSROs), which instead show improved compliance, stronger internal controls, and healthy market competition under ongoing regulatory oversight.
The SEC's annual reports on nationally recognized statistical rating organizations (NRSROs) reveal enhanced compliance, upgraded information technology resources, and strengthened governance practices across the industry. No fraud, enforcement actions, penalties, or financial misconduct were identified; instead, regulators noted improved policies, internal audit functions, and transparency in line with the Dodd-Frank Act and the 2006 Credit Rating Agency Reform Act. Smaller NRSROs are increasingly competing by specializing in niche rating categories, contributing to market diversity and investor protection.
The SEC has released two annual staff reports on nationally recognized statistical rating organizations (NRSROs), finding no evidence of fraud, misconduct, or enforcement actions. Instead, the reports highlight significant improvements in compliance monitoring, internal audit functions, and policies aligned with securities laws, driven by increased awareness of regulatory obligations. NRSROs have also expanded their information technology resources to better support oversight and disclosure requirements. Smaller rating agencies are actively competing with established firms by specializing in specific rating categories, enhancing market diversity and transparency. The SEC’s Office of Credit Ratings commended these developments and affirmed its commitment to continued engagement and risk monitoring to safeguard investors. The findings are mandated by the 2006 Credit Rating Agency Reform Act and the 2010 Dodd-Frank Act, both aimed at improving accountability in the credit rating industry. No financial penalties, settlements, or allegations of wrongdoing were cited in either report. The staff team involved in the examinations included over 30 SEC personnel, underscoring the thoroughness of the review process.
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- person jessica s. kane
- Jessica S. Kane Said NRSROs are continuing to display a greater awareness of their obligations as regulated entities
- The Staff Will Continue To Engage With the firms to monitor potential risks to promote compliance, strengthen governance, and ensure robust disclosure
- The Annual Exam Report Summarizes The staff examinations of each NRSRO
- The Staff Observed Improvements in the firms' compliance monitoring and internal audit functions
- The Report Notes NRSROs have further refined their policies, procedures, and controls related to securities laws and rules
- The Annual Report Discusses The state of competition, transparency, and conflicts of interest among NRSROs and identifies applicants for NRSRO registration
- The Staff Notes Smaller NRSROs continue to actively compete with more established rating agencies, and some are specializing in particular rating categories and classes
Credit rating agencies under Securities and Exchange Commission oversight show improved compliance, increased information technology resources, and continued competition, according to two SEC staff reports released today on nationally recognized statistical rating organizations (NRSROs). "NRSROs are continuing to display a greater awareness of their obligations as regulated entities," said Jessica S. Kane, Acting Director of the SEC's Office of Credit Ratings. "The staff will continue to engage with the firms and monitor potential risks to promote compliance, strengthen governance, and ensure that NRSROs provide robust disclosure for the benefit of investors." The annual exam report, required by the 2010 Dodd-Frank Act, summarizes the staff examinations of each NRSRO. The staff observed improvements in the firms' compliance monitoring and internal audit functions. The report notes that NRSROs have further refined their policies, procedures, and controls related to securities laws and rules. The annual report, mandated by the 2006 Credit Rating Agency Reform Act, discusses the state of competition, transparency, and conflicts of interest among NRSROs and identifies applicants for NRSRO registration. The staff notes that smaller NRSROs continue to actively compete with more established rating agencies, and some are specializing in particular rating categories and classes. The following SEC staff contributed to the examinations and reports: Diane Audino, Michael Bloise, David Bobillot, Sondra Boddie, Rita Bolger, Patrick Boyle, Aaron Byrd, Roseann Catania, Kristin Costello, Doreen Crawford, Scott Davey, Franco Destro, Jill Flory, Ilya Fradkin, William Garnett, Kenneth Godwin, Michael Gonzalez, Barry Huang, Julia Kiel, Russell Long, Chichita Nickens, David Nicolardi, Sam Nikoomanesh, Kevin O’Neill, Harriet Orol, Abraham Putney, Jeremiah Roberts, Mary Ryan, Cynthia Sargent, Charles Schiller, Andrew Smith, Alexa Strear, Warren Tong, Evelyn Tuntono, Chris Valtin, Kevin Vasel, Andrew Vita, and Michele Wilham.