Association for Financial Professionals President Jim Kaitz Testifies at SEC Hearing on Credit Rating Agencies

Kaitz Contributes to Hearings in SEC Effort to Evaluate and Improve Investor Reform

BETHESDA, MD -- NOVEMBER 21, 2002 -- AFP President and Chief Executive Officer Jim Kaitz, testified before the Securities and Exchange Commission (SEC) on the role, function and concerns regarding the future of credit rating agencies today in Washington, D.C.

Kaitz spoke on behalf of the 14,000 member association that released a survey on credit rating agencies at its annual conference November 4. Survey results showed that a significant number of respondents do not believe their companies' ratings or the ratings of the companies in which they invest are accurate or timely. Respondents also called on the SEC to increase the oversight of rating agencies and increase the number of those certified.

"AFP believes that the credit rating agencies are vital to the efficient operation of the markets," said Kaitz. "Our members are significant users of rating agency information and the survey results provide evidence that something needs to be done to improve the process. We hope that these hearings will assist in creating more competition in the market and improving the timeliness and quality of ratings, which will benefit issuers, investors and the securities markets overall."

Additional survey results that correspond to the discussions in the hearings include:

• Most survey respondents believe a periodic review of the rating agencies is necessary.
• Seventy-three percent of corporate practitioners, along with 71 percent of respondents from financial industry service providers, believe that the SEC should periodically review the rating agencies it currently recognizes, for example, every five years.
• Sixty-five percent of corporate practitioners and 60 percent of respondents from financial service providers believe the SEC should clarify its procedures for rating agencies to be nationally recognized as statistical rating organizations (NRSROs).

The SEC hearings were held to comply with specifications in the Sarbanes-Oxley Act of 2002 that called for an evaluation of rating agencies.

The Association for Financial Professionals in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards.