By Judith Burns
WASHINGTON (Dow Jones)--U.S. Securities and Exchange Commission Chairman Christopher Cox said Tuesday that he expects the SEC will propose rules this year on credit-rating agencies.
"There's a great deal of interest in credit-rating agencies and the SEC's planned rulemaking in this area," Cox told reporters after testifying to a House subcommittee on small-business contracting and technology. He said he expects an SEC proposal on rating firms this year, calling it "a high priority."
Rating firms such as Moody's Investors Service Inc., a Moody's Corp. (MCO) unit, and Standard & Poor's, a division of McGraw-Hill Companies Inc. (MHP), have come under criticism recently for being slow to downgrade securities backed by risky "subprime" mortgage loans. Although the SEC has new authority to inspect ratings firms, it is barred from looking at rating firms' methodologies.
Separately, Cox said he expects the SEC will publicly announce its plans within the next month or so for rulemaking on international accounting, data-tagging technology using extensible business reporting language, or XBRL, and for a system of "mutual recognition" of regulators outside the U.S.
In his prepared remarks to the House panel, Cox endorsed legislation that would require documents issued by federal agencies to be written in plain English. As part of the push for plain English, Cox said the SEC plans to survey investors soon on the usefulness of corporate annual reports, proxy statements, mutual-fund prospectuses and other required disclosure documents. The SEC may consider changes based on what it hears and will repeat the surveys in the future to see if investors are reading such documents or just pitching them into the trash bin, Cox added.
