Securities: ASIC questions rights to disclose credit rating data in prospectus
ASIC is seeking public comment on whether to withdraw current class order relief that allows issuers of investment products to cite credit ratings in disclosure documents without the consent of credit rating agencies.
Currently a class order provides relief from the requirement that an issuer must not cite a statement made by a person in a prospectus or PDS, unless the person has consented to that statement being included in the form and context in which it appears. The class order relief permits issuers to cite credit ratings from Standard & Poor’s, Moody’s Investor Service and Fitch Ratings in a prospectus or PDS without the consent of credit rating agencies themselves.
This class order has implications for the accountability of credit rating agencies to investors because liability for the content of prospectuses and PDSs only applies to persons who have consented to having their statements cited.
Consultation Paper 117 Consent to quote credit ratings in disclosure documents and PDSs will help guide ASIC’s review of its class order relief to find an appropriate balance between:
-
- making credit ratings available to retail investors;
- promoting the accountability of credit rating agencies to investors; and
- giving credit rating agencies better control of the use of their ratings.
The consultation paper seeks to obtain more information about:
-
- how important credit ratings are to retail investors;
- how common is the use of credit ratings in disclosure documents and advertising to retail investors;
- how do credit rating agencies control the use of credit ratings; and
- what are the practicalities and costs of requiring and giving consent to cite credit ratings in disclosure documents.
The consultation paper seeks the views of stakeholders, including from issuers and their advisers, credit rating agencies and organisations representing retail investors.
Submissions on the issues in the Consultation Paper close on Thursday 22 October 2009.
Download the Consultation Paper (CP 117)
Download PDF version of this page