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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 9 provides an assessment of the civil liability regime for CRAs established by the EU regulatory framework. The EU civil liability framework for CRAs prescribed a private enforcement mechanism for investors and issuers regardless whether or not the ratings activities are subject to a contractual relationship. In this context, the EU liability framework for CRAs can be considered to mark a step forward in the regulation of the rating industry, although it is probably not sufficient to introduce a level playing field for private enforcement by investors. It is observed that CRAs should be regulated having due regard to their potential systemic threat.

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