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SEC seeks public comment to assist in study of assigned credit ratings

May 11 2011 Stuart Gittleman, Compliance Complete

The Securities and Exchange Commission has requested comment on the feasibility of having a utility or a self-regulatory organization assign a nationally recognized statistical rating organization to determine credit ratings for structured finance products. Section 939F of the Dodd-Frank Wall Street Reform and Consumer Protection Act orders the SEC to study assigned ratings as part of a broader examination of the rating process and the conflicts associated with the "issuer-pay" and the "subscriber-pay" models. The Dodd-Frank Act also requires the SEC to study the feasibility of establishing a system in which a public or private utility or an SRO assigns NRSROs to determine the credit ratings for structured finance products. The study must address the range of metrics that could be used to determine the accuracy of ratings, and alternative ways to compensate NRSROs that would create incentives for accurate ratings. Comments should consider potential mechanisms for determining fees,

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