Accountability and Transparency in Rating Agencies Act

Summary

Accountability and Transparency in Rating Agencies Act - Amends the Securities Exchange Act of 1934 to direct the Securities and Exchange Commission (SEC) to review credit ratings issued by each nationally recognized statistical rating organization (NRSRO) to ensure that the NRSRO has established and documented internal processes for determining credit ratings consistent with SEC rules. Requires each NRSRO to make available and maintain such records and information as the SEC may prescribe. Modifies SEC powers to impose fines and censure a noncompliant NRSRO, including NRSRO failure to: (1) guard against certain violations; and (2) conduct sufficient surveillance to ensure that credit ratings remain current and reliable. Prescribes rules for NRSRO corporate governance, organization, and management of conflicts of interest. Requires the SEC to issue specified rules governing management and disclosure of conflicts of interest regarding credit ratings issued by an NRSRO (including a one-year look-back requirement to determine whether a conflict of interest exists among employees of entities subject to credit ratings who were NRSRO employees during the one-year period preceding the rating date). Requires the SEC to: (1) conduct periodic reviews of NRSRO compliance with the look-back requirement; (2) establish an office that administers SEC rules governing NRSRO practices; (3) require each NRSRO to disclose publicly information on initial ratings and subsequent changes to such ratings; and (4) prescribe rules requiring each NRSRO to adopt certain credit ratings methodologies that include risk assessment and the assumptions underlying the procedures and methodologies used to determine a credit rating. Requires an NRSRO to report to the SEC any case where it can reasonably be expected to know that a former employee obtained employment with any issuer, underwriter, or sponsor of an instrument for which the NRSRO issued a credit rating during the 12-month period prior to such employment. Directs the SEC to: (1) make such information publicly available; and (2) require issuers to disclose preliminary credit ratings received from NRSROs on structured products and corporate debt. Prohibits an NRSRO from engaging in specified rating services for which additional compensation is paid to an issuer, underwriter or placement agent of a security, including: (1) risk management advisory services; and (2) consulting services regarding any merger, sales, or disposition of the assets of an issuer. Requires each federal agency to report to Congress on a review of its policies, practices, and regulations to assess the creditworthiness of a security or money market instrument. Directs the SEC to study and report to Congress on creating a system that assigns NRSROs on a rotating basis to issuers seeking a credit rating.

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Documents

6 official files

• Reported in House (text)

  Reported in House · EN · 17 December 2010

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• Reported in House (PDF)

  Reported in House · EN · 17 December 2010

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• Reported to House amended, Part I

  summary · EN · 16 December 2010

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• Introduced in House (text)

  Introduced in House · EN · 21 October 2009

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• Introduced in House (PDF)

  Introduced in House · EN · 21 October 2009

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• Introduced in House

  summary · EN · 21 October 2009

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