July 19, 2010 / 4:04 PM / 9 years ago

Fitch won't allow ratings to be used in reg filings

NEW YORK, July 19 (Reuters) - Fitch Ratings said on Monday that it will not give debt issuers consent to list its ratings in debt prospectuses and other registration filings, as doing so would make the company subject to new liability rules.

The U.S. Congress on Thursday approved a broad overhaul of financial rules that will include a number of changes designed to strengthen credit rating agencies, which were blamed for exacerbating the credit crisis by awarding ratings that deemed risky mortgage debt to be safe. For details, see [ID:nLDE66F01C]

The rules include changes that may make registered rating agencies experts under terms in the Securities Act, and this would leave them exposed to expert liability rules, Fitch said.

“Fitch is not willing to take on such liability without a complete understanding of the ramifications of that liability,” it said.

As a result, Fitch will not consent to debt issuers using its ratings in debt prospectuses or registration statements, though the company will continue to publish credit ratings, it said.

New regulations may also remove an exemption that allows debt issuers to provide credit rating agencies with material non-public information, Fitch said.

“To the greatest extent possible, Fitch will work with the issuer community to put in place appropriate mechanisms so that Fitch can continue to receive confidential information as part of the rating process,” it said. (Reporting by Karen Brettell; Editing by Eric Walsh)

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