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AFP Submits Comments on SEC Rating Agency Proposal
Washington, DC - March 12, 2007 - The Association for Financial Professionals (AFP) comments on the Securities and Exchange Commission's (SEC) proposal implementing the Credit Rating Agency Reform Act of 2006 (Reform Act).
"For several years, our members have been seeking reform of the credit ratings market. Finally, the SEC has issued a proposal that will ultimately bring transparency, competition, and accountability to the credit ratings market," said AFP President and CEO, James A. Kaitz.
In a letter that was largely supportive of the Commission's proposal, the Association for Financial Professionals noted that they were ". . . pleased that in many areas the Commission's proposal reflects the recommendations that AFP has been making for several years."
The letter goes on to note that "AFP believes that the Commission has offered a proposal that is narrowly tailored and flexible, and that the proposal will foster competition and produce more credible and reliable ratings. The elimination of the staff no action process, the establishment a clear registration process, and a prudent oversight regime that imposes a high level of accountability on the registered rating agencies will promote competition and restore confidence in the credit ratings market."
AFP did offer recommendations in the area of conflicts of interest. AFP recommended that the SEC add the following two items to its prohibited conflicts list:
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NRSROs should be required to establish distinct and absolute separation between rating analysts and credit rating agency staff responsible for generating revenue from credit ratings, rating assessment services, corporate governance reviews, or other ancillary services offered by the credit rating agency and;
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The Commission should bar analyst compensation from being linked in any way to revenue generated from credit ratings or any ancillary services.
AFP President and CEO James A. Kaitz signed the letter. Read AFP's comment letter.
The Credit Rating Agency Reform Act, which President Bush signed on September 29, 2006, requires that the SEC issue final rules implementing the Reform Act within 270 day of enactment. AFP strongly supported enactment of the Credit Rating Agency Reform Act of 2006. During consideration of the bill, AFP provided extensive testimony and wrote several letters to Congress urging passage of the Reform Act.
The Association for Financial Professionals (AFP) in Bethesda, Maryland, supports more than 15,000 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 daily 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.
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