If regulators create a distasteful rule that could affect your company's livelihood, maybe they'll relent if you remind them how annoying it is to enforce new regulations.
At least that seems to be the general idea behind Standard and Poor's latest appeal to the SEC. The rating agency has asked the SEC to rethink new rules aimed at stifling some of the conflicts of interest at rating agencies. Basically, S&P claims the SEC will be inundated with questions and complaints about the new regs — similar to those received from auditors and their public-company clients lost over how to talk to each other when the auditing rules under Section 404 were first laid out.
As we reported yesterday, the agencies have defended their reputations over the past year by insisting they're nothing like the audit firms — and could not have been expected to fully know that the underlying subprime-mortgage securities in structured financial products they rated were falling apart.
In an effort to prevent over-inflated ratings, the SEC has proposed prohibiting the raters' analysts from making recommendations to issuers of securities that they will later rate. S&P claims this rule could scare analysts and issuers into "not speaking at all." And besides, doesn't the SEC remember how "hard" the staff worked to clear up similar fears that occurred between auditors and public companies after 404 was issued?
"We expect the commission and its staff to be tasked ... with issuing modifications and clarification of what the rule is intended to ban, just as [they] were required to do following the adoption of Auditing Standard No. 2, in order to mitigate the unintended consequence of several critical ratings-related communications," S&P wrote. |
Video
