The Byline Is Not a Bond

Rule 436(g) was a four-line exemption. It said that when a nationally recognized rating agency’s rating appeared in a securities registration statement, that rating did not count as an expert opinion under Sections 7 and 11 of the Securities Act — so the agency never had to consent to being named, and could not be sued as an expert for what its name was attached to. Section 939G of the Dodd-Frank Act repealed it on July 21, 2010. Moody’s had said six days earlier that, given the potential legal consequences, it could not consent to inclusion of its ratings in prospectuses and registration statements. Within about a day, Ford Motor Credit had pulled a planned asset-backed offering and written to the SEC asking for enforcement relief; the SEC granted it that same day and extended it indefinitely in November. Public asset-backed issuers went back to omitting the ratings — and the identity of the rating agency — from the documents that legally mattered. Nothing about the names had…