September 2, 1994
TO: BOARD OF GOVERNORS NO. 92-94
SEC RULES COMMITTEE NO. 100-94
RE: SEC CONCEPT RELEASE ON RATING AGENCIES (NRSROs)
__________________________________________________________
The Securities and Exchange Commission has issued a concept
release soliciting comment on the appropriate role of ratings in
the federal securities laws, and the need to establish formal
procedures for designating and monitoring the activities of
nationally recognized statistical rating organizations ("NRSROs").
In addition, and of particular interest to investment
companies, the Commission has requested input on the use of mutual
fund risk ratings. Specifically, the Commission solicited comment
on: (1) whether mutual fund risk ratings issued by NRSROs and other
organizations should be disclosed in fund prospectuses, sales
literature and advertisements; (2) the type of disclosure that
should accompany these ratings to assure that their significance
and limitations are appreciated by investors, and any other
appropriate conditions for their use in fund prospectuses and
advertisements; (3) whether the use of these ratings may lead
investors to select a fund based solely on a fund's rating; and (4)
whether Rule 436(g) under the Securities Act should be amended so
that a fund could include these types of ratings in its
registration statement without having to provide a written consent
conveying expert liability to the organization preparing the
ratings.
A copy of the Commission's release is attached. Comments are
due on the concept release within 90 days from the date the release
is published in the Federal Register. Please provide the
undersigned with any comments on the release that you would like
the Institute to consider including in its comment letter by
October 7, 1994. My direct number is 202/326-5824.
Amy B.R. Lancellotta
Associate Counsel
Attachment