Annual Staff Report on NRSROs Unveiled
Today, the Securities and Exchange Commission released a staff report that provides a summary of the staff’s examinations of nationally recognized statistical rating organizations (NRSROs) and discusses the current state of competition, transparency, and conflicts of interest among Nationally Recognized Statistical Rating Organizations. The report was published by the staff of the SEC.
According to Gary Gensler, the Chairman of the Securities and Exchange Commission (SEC), “The Office of Credit Ratings is critical to the Commission’s work to protect investors and ensure the integrity of the rating process,” including through the office’s oversight of Nationally Recognized Statistical Rating Organizations. The Office of Credit Ratings (OCR) will continue its efforts to ensure that credit ratings are accurate, reliable, and fair through the 2022 staff report.
Our risk-based approach to Nationally Recognized Statistical Rating Organization examinations protects investors by focusing on specific NRSRO activities and assessing compliance with applicable laws and rules,” said Lori Price, Director of the Office of Credit Ratings. “Our risk-based approach to NRSRO examinations protects investors by focusing on specific NRSRO activities.” “The comprehensive staff report provides information about NRSROs, their credit ratings businesses, and the industry more generally. It also summarizes the findings from our annual examinations and provides a summary of those findings.”
According to what is stated in the report, the staff’s NRSRO examinations that took place in 2022 took into consideration a number of factors, including the following:
- Practices of rating surveillance; the effect of COVID-19 on credit ratings for commercial real estate; the question of whether or not business communications are carried out through unauthorized means;
- Employees of NRSRO who have ownership in securities
- The impact on credit ratings that can be expected to result from the marketing and development of ESG products that are sold on their own; and
- rankings of companies with headquarters in China.
Reports from previous years compiled by the Office of Credit Ratings can be found on this page.
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