Striking a Measure

Striking a Measure

As the conference committee on the US Congress' financial regulatory overhaul bill prepares to meet later today, Congressional negotiators are considering striking a measure, i.e. removing it, from the bill that would have established an investor-led board empowered to select firms on a rotation to rate structured securities products.

In addition, the language to be proposed by negotiators from the House of Representatives would direct the Securities and Exchange Commission (“SEC”) to study conflicts of interest within the securities ratings industry as a whole, the metrics applied to the accuracy of the ratings, and the industry's compensation practices.

House negotiators will also propose striking language from the bill that would allow investors to sue ratings agencies for "knowing and reckless" behavior in issuing ratings and replace it with a gross negligence requirement.