The Securities and Exchange Commission proposed new rules on Wednesday intended to stem conflicts of interest, expand disclosure for Wall Street’s credit rating industry and flag the ratings of more complex securities.
The S.E.C. is seeking to make the ratings business more open while also encouraging new firms to enter. The three firms that dominate the $5 billion-a-year industry — Standard & Poor’s, Moody’s Investors Service and Fitch Ratings — have been widely accused of failing to identify risks in subprime mortgage investments.
The most contentious element of the proposal would require ratings of complex securities, like those underpinned by mortgages or student loans, to be distinguished from those for more traditional securities, like corporate or municipal bonds. It drew an opposing vote from one of the three S.E.C. commissioners at a public meeting and a swift condemnation from a major Wall Street lobbying group.
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