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The Governance of Credit Rating Agencies

Regulatory Regimes and Liability Issues

Andrea Miglionico

The global crisis revealed that credit rating agencies (CRAs) are capable of bringing about potential distortions in the financial sector, thereby resulting in a reduction in market confidence which, in turn, influences negotiations and expectations. CRAs need to be held accountable for lack of transparency and inaccurate ratings, however the existing regulatory framework does not secure adequate investor protection. This book provides a new and important contribution to research in the area, at a crucial time in the debate around financial regulation and investment regimes.
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Andrea Miglionico


Chapter 8 argues that the present system for regulating CRAs in the US is defective in terms of information asymmetries, an absence of transparency, conflicts of interest and limited competition. This chapter discusses a range of proposals aimed at reforming the current regulatory framework. It is suggested that CRAs should be treated in the same way as other professional financial intermediaries (such as auditors and financial analysts) by recasting their responsibilities in order to put them under professional duties entailing the requisite degree of care vis-à-vis investors. This chapter also observes that a civil liability regime for CRAs could constitute a system of investor protection over and above traditional regulation.

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