Market participants were compelled to address the new (post Dodd-Frank Act) requirements relating to disclosures of ratings immediately after the legislation’s enactment. Now that the SEC has provided guidance and that market practice has begun to develop, below are a few summary thoughts:
- SEC guidance clarified that rating agency consent is not required where reporting issuers included a discussion of ratings in their SEC filings as it pertains to their risk factors and Management’s Discussion & Analysis sections addressing funding costs, liquidity issues, and the impact of ratings changes on these matters.
- An issuer may include ratings information in a free writing prospectus (this would include term sheets, product brochures or other marketing materials filed as FWPs) or in a Rule 134 compliant communication.
- Registration statements declared effective prior to July 22, 2010 are grandfathered, but issuers must take care to consider their disclosures, as the grandfathering applies only until the filing of the next post-effective registration statement (this includes the issuer’s next annual report in Form 10-K, 20-F or 40-F).