Rating agencies have been in the news in recent months, both for a spate of downgrades, including of the debt of the United States, and reports of investigations into alleged rating agency wrongdoing. These developments suggest it is worthwhile to pay renewed attention to a public comment letter sent to the U.S. Securities and Exchange Commission this past March by Massachusetts Attorney General Martha Coakley. The letter highlighted the rating agencies’ refusal to accept expert liability for their ratings and the novel issues in securities regulation occasioned by that refusal.
Coakley’s letter focuses on two issues. First, she stresses the policy reasons for applying expert liability to the rating agencies. Second, she examines the possibility that SEC guidance in this area has been without legal effect.
