I came across a paper in my travels: Enhancing the Accountability of Credit Rating Agencies: The Case for a Disclosure-Based Approach by Professor Stéphane Rousseau of the Université de Montréal.
To my shame, I have to confess that I haven’t done anything more than skim it quickly at this point … but it does look interesting, provides a Canadian context, and I’m referencing it on PrefBlog because I want to find it later!
Update: On a related note is the commentary on National Policy 51-201:
Why is disclosure to credit rating agencies in the necessary course of business when disclosure to equity analysts is not? Credit rating agencies analyze issuers’ debt for public consumption; equity analysts analyze issuers’ equity for public consumption.
The CSA’s view is that there is a fundamental distinction between disclosure to credit rating agencies and disclosure to equity analysts, which lies in the purpose for which the information is used. While research reports prepared by equity analysts can be targeted to an analyst’s firm’s clients, credit ratings are directed to a wider public audience. We also note that credit rating agencies are not in business to trade, as principal or agent, in the securities they are called upon to rate. This is distinguishable from the equity analyst who typically works for an investment bank whose activities include trading, underwriting and advisory services.
As the SEC indicated in response to similar comments about the exclusion of rating agencies from the reach of Regulation FD, “[r]atings organizations…have a mission of public disclosure; the objective and result of the ratings process is a widely available publication of the rating when it is completed.” The CSA adopts this analysis. In paragraph 3.3(2)(g) of the Policy, the CSA indicates that communications to credit rating agencies would generally be considered in the “necessary course of business,” provided that the information is disclosed for the purpose of assisting the agency to formulate a credit rating and the agency’s ratings generally are or will be publicly available.
Further, securities legislation often affords companies or their securities status based on obtaining specified ratings from approved rating agencies. Consequently, ratings form part of the statutory framework of provincial securities legislation in a way that analysts’ reports do not. We have amended the Policy to highlight this distinction (see subsection 3.3(7) of the Policy).
[…] adjustment to Regulation FD in the future – this is the source of National Policy 51-201, which states that Credit Rating Agencies may have access to material non-public information. Chairman Cox of the SEC said in testimony to the Senate Banking Committee: To enhance […]