Massachusetts AG Challenges SEC

September 6, 2011 by · Leave a Comment
Filed under: SEC 

The attorney general of Massachusetts, Martha Coakley, has sent a letter to the chairwoman of the Security and Exchange Commission (SEC), Mary Schapiro, asking why the commission is refusing to enforce ratings agencies’ liability requirements. When Dodd-Frank became law, ratings agencies were subject to expert liability from that moment on. This opened the agencies to lawsuits from investors.

The New York Times quotes Ms Coakley as saying in an interview that, “We wanted to make clear that we see this as a problem and important enough that we would like an answer… “They [the SEC] are either going to enforce this or say why they are not. As a state regulator, we don’t enforce Dodd-Frank, but we certainly deal with the fallout when it is not enforced.”

The New York Times also quoted Meredith Cross, director of the SEC’s division of corporation finance. She explained the agency’s decision to not enforce the regulation by saying, “If we didn’t provide the no-action relief to issuers, then they would do their transactions in the unregistered market…You would impede investor protection. We thought, notwithstanding the grief we would take, that it would be better to have these securities done in the registered market.”

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