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ARTICLE · 07 APRIL 2022

SEC Proposes To Remove Credit Ratings References From Regulation M

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Regulation M is intended to limit the activities of certain participants in a distribution, which activities may have a manipulative effect on the market for the offered security.

United StatesConsumer Protection
Ryan Castillo
Ryan Castillo
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On March 23, 2022, the US Securities and Exchange Commission (the "SEC") proposed amendments to remove  references to credit ratings from Regulation M, replace them with alternative measures of creditworthiness and  impose related recordkeeping obligations on broker-dealers (the "Proposal").1

Background

Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank")  directed the SEC to: review its rules that use credit ratings to assess the creditworthiness of a security or money  market instrument; remove any reference to or requirement of reliance on credit ratings; and substitute such  standard of creditworthiness as the SEC determines to be appropriate.2  The SEC has completed much of this  work, with the only remaining references to credit ratings found in Rules 101 and 102 of Regulation M. The SEC  had proposed amendments in 2008 and 2011 to remove credit ratings references from Regulation M and  introduced, back

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