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Abstract: 

After nearly a century of self-regulation, the credit rating agencies now face significant new regulation and liability--including potential Section 11 liability--under the Dodd-Frank Wall Street Reform and Consumer Protection Act. This article provides a brief overview of the history and operational processes of the credit rating agencies, highlights the Dodd-Frank Act’s changes to the regulatory and liability regime applicable to the agencies, and, finally, given the credit rating agencies’ new liability as gatekeepers, sets out potential defenses available to them.

Keywords: Dodd-Frank Act; credit rating process; Securities Act Sec. 11 liability; Rule 436(g); First Amendment defense; due diligence defense; negative causation defense; subjective falsity defense

Affiliations:  1: Latham & Watkins LLP; 2: Latham & Watkins LLP.