The Securities and Exchange Commission (SEC) issued Release No. 34-57967, Proposed Rules for Nationally Recognized Statistical Rating Organizations, on June 16, 2008.

The proposed rule making is designed to address ?concerns about the integrity of credit rating procedures in light of the role played in determining credit ratings for securities linked to subprime residential mortgages,? the SEC said.

The comment period for the rule proposal is 30 days from its publication in the Federal Register, which normally takes place a few days after a rule is published on the SEC?s website.

The SEC gained authority over credit rating agencies in June 2007, when Congress passed the Credit Rating Agency Reform Act. As the sub-prime mortgage crisis worsened, the SEC began an investigation into whether rating agencies used improper methods for determining credit ratings in order to curry favor with clients. Chairman Christopher Cox said last week to expect the SEC?s report in the next month.

The SEC is proposing adding a new rule to the Securities Exchange Act of 1934, Rule 17g-7, which would require rating agencies to publish a report outlining how the methods for rating a structured finance product differ from those used for other products, such as corporate or municipal bonds. Alternatively, rating agencies could opt to designate a structured product?s rating with a different symbol, to alert investors.

?The goal of the proposal is to spur investors to perform more rigorous internal risk analysis on structured finance products so that they do not overly rely on credit ratings in making investment decisions,? the SEC said.