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15 U.S. Code § 78o-7. Registration of nationally recognized statistical rating organizations
(a) Registration procedures
(1) Application for registration
(A) In general
A credit rating agency that elects to be treated as a nationally recognized statistical rating organization for purposes of this chapter (in this section referred to as the “applicant”), shall furnish to the Commission an application for registration, in such form as the Commission shall require, by rule or regulation issued in accordance with subsection (n), and containing the information described in subparagraph (B).
(B) Required informationAn application for registration under this section shall contain information regarding—
(i)
credit ratings performance measurement statistics over short-term, mid-term, and long-term periods (as applicable) of the applicant;
(ii)
the procedures and methodologies that the applicant uses in determining credit ratings;
(iii)
policies or procedures adopted and implemented by the applicant to prevent the misuse, in violation of this chapter (or the rules and regulations hereunder), of material, nonpublic information;
(iv)
the organizational structure of the applicant;
(v)
whether or not the applicant has in effect a code of ethics, and if not, the reasons therefor;
(vi)
any conflict of interest relating to the issuance of credit ratings by the applicant;
(vii)
the categories described in any of clauses (i) through (v) of section 78c(a)(62)(B) of this title with respect to which the applicant intends to apply for registration under this section;
(viii)
on a confidential basis, a list of the 20 largest issuers and subscribers that use the credit rating services of the applicant, by amount of net revenues received therefrom in the fiscal year immediately preceding the date of submission of the application;
(ix)
on a confidential basis, as to each applicable category of obligor described in any of clauses (i) through (v) of section 78c(a)(62)(B) of this title, written certifications described in subparagraph (C), except as provided in subparagraph (D); and
(x)
any other information and documents concerning the applicant and any person associated with such applicant as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.
(C) Written certificationsWritten certifications required by subparagraph (B)(ix)—
(i)
shall be provided from not fewer than 10 qualified institutional buyers, none of which is affiliated with the applicant;
(ii)
may address more than one category of obligors described in any of clauses (i) through (v) of section 78c(a)(62)(B) of this title;
(iii)
shall include not fewer than 2 certifications for each such category of obligor; and
(iv) shall state that the qualified institutional buyer—
(I)
meets the definition of a qualified institutional buyer under section 78c(a)(64) of this title; and
(II)
has used the credit ratings of the applicant for at least the 3 years immediately preceding the date of the certification in the subject category or categories of obligors.
(D) Exemption from certification requirement
A written certification under subparagraph (B)(ix) is not required with respect to any credit rating agency which has received, or been the subject of, a no-action letter from the staff of the Commission prior to August 2, 2006, stating that such staff would not recommend enforcement action against any broker or dealer that considers credit ratings issued by such credit rating agency to be ratings from a nationally recognized statistical rating organization.
(E) Limitation on liability of qualified institutional buyers
No qualified institutional buyer shall be liable in any private right of action for any opinion or statement expressed in a certification made pursuant to subparagraph (B)(ix).
(2) Review of application
(A) Initial determinationNot later than 90 days after the date on which the application for registration is furnished to the Commission under paragraph (1) (or within such longer period as to which the applicant consents) the Commission shall—
(i)
by order, grant such registration for ratings in the subject category or categories of obligors, as described in clauses (i) through (v) of section 78c(a)(62)(B) of this title; or
(ii)
institute proceedings to determine whether registration should be denied.
(B) Conduct of proceedings
(i) ContentProceedings referred to in subparagraph (A)(ii) shall—
(I)
include notice of the grounds for denial under consideration and an opportunity for hearing; and
(II)
be concluded not later than 120 days after the date on which the application for registration is furnished to the Commission under paragraph (1).
(ii) Determination
At the conclusion of such proceedings, the Commission, by order, shall grant or deny such application for registration.
(iii) Extension authorized
The Commission may extend the time for conclusion of such proceedings for not longer than 90 days, if it finds good cause for such extension and publishes its reasons for so finding, or for such longer period as to which the applicant consents.
(C) Grounds for decisionThe Commission shall grant registration under this subsection—
(i)
if the Commission finds that the requirements of this section are satisfied; and
(ii) unless the Commission finds (in which case the Commission shall deny such registration) that—
(I)
the applicant does not have adequate financial and managerial resources to consistently produce credit ratings with integrity and to materially comply with the procedures and methodologies disclosed under paragraph (1)(B) and with subsections (g), (h), (i), and (j); or
(II)
if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (d).
(3) Public availability of information
Subject to section 78x of this title, the Commission shall, by rule, require a nationally recognized statistical rating organization, upon the granting of registration under this section, to make the information and documents submitted to the Commission in its completed application for registration, or in any amendment submitted under paragraph (1) or (2) of subsection (b), publicly available on its website, or through another comparable, readily accessible means, except as provided in clauses (viii) and (ix) of paragraph (1)(B).