Alert May 17, 2011

SEC Requests Public Comment on the Feasibility of Assigned Credit Ratings for Structured Finance Products

The SEC issued a request for public comment on the feasibility of a system in which a public or private utility or a self-regulatory organization assign NRSROs to determine credit ratings for structured finance products.  The SEC is considering this issue as part of a study mandated by the Dodd-Frank Act that must also address the credit rating process for structured finance products and the conflicts associated with the “issuer-pay” and “subscriber-pay” models.  The SEC must submit a report to Congress by July 21, 2011 that sets forth its findings from the study and any recommendations for regulatory or statutory changes that the SEC determines should be made to implement the study’s findings.  Comments must be submitted by 120 days after the request for public comment is published in the Federal Register.