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AFP Press Release
AFP's Jim Kaitz Responds to SEC's Proposal on Rating Agency Reform
Bethesda, MD - March 3, 2005 - In response to the Securities and Exchange Commission's (SEC) decision to move forward on a proposal reforming the nation?s credit rating process, Jim Kaitz, President and CEO of the Association for Financial Professionals made the following statement:
"For over two years we've been asking the SEC on behalf of our 14,000 financial professional members to clarify the process by which a rating agency can become a nationally recognized statistical rating organization (NRSRO). Today's action is a modest step in the right direction, but it is not enough.
Since the Commission has stated that it lacks the authority to go beyond defining NRSRO status, we would strongly support Congressional action granting the SEC the authority it needs.
As the SEC considers a voluntary industry code of conduct, it is critical that they engage all market participants, not just the credit rating agencies. Further, it is important to recognize that a voluntary code of conduct without SEC enforcement will not address potential conflicts of interest, abusive practices and the protection of non-public information."
The credit rating agencies and investor confidence in the ratings they issue are vital to the efficient operation of global capital markets. However, confidence in rating agencies and their ratings has diminished significantly over the past few years. Today's action by the SEC is intended to restore market place confidence in the credit ratings process.
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The Association for Financial Professionals (AFP) 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. For more information about AFP visit www.afponline.org.