SEC Allows Omission of Credit Rating Disclosure from ABS Deals

On July 22, the SEC released a ‘No Action Letter’ allowing issuers to omit credit rating disclosure from ABS prospectuses for a period of six months. The Dodd-Frank Wall Street Reform and Consumer Protection Act eliminated SEC Rule 436(g) which effectively exempted NRSROs from liability as experts under Section 11 of the Securities Act. For the six month period covered by the No Action Letter, issuers will be able to omit prospectus disclosure of ratings and accordingly will not need to obtain rating agency consent to be named as an expert.  Also in connection with the repeal of Rule 436(g) under the Act, S&P, Moody’s, Fitch, and DBRS have each released comments addressing the effect of the Act on credit rating agencies. Sec No Action Letter.  S&P.  Moody’s. Fitch. DBRS.