Page:United States Statutes at Large Volume 124.djvu/1910

 124 STAT. 1884 PUBLIC LAW 111–203—JULY 21, 2010 ‘‘(B) EXCEPTION.—In the case of an action for money damages brought against a credit rating agency or a controlling person under this title, it shall be sufficient, for purposes of pleading any required state of mind in relation to such action, that the complaint state with particularity facts giving rise to a strong inference that the credit rating agency knowingly or recklessly failed— ‘‘(i) to conduct a reasonable investigation of the rated security with respect to the factual elements relied upon by its own methodology for evaluating credit risk; or ‘‘(ii) to obtain reasonable verification of such fac- tual elements (which verification may be based on a sampling technique that does not amount to an audit) from other sources that the credit rating agency consid- ered to be competent and that were independent of the issuer and underwriter.’’. SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY AUTHORITIES. Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o–7), as amended by this subtitle, is amended by adding at the end the following: ‘‘(u) DUTY TO REPORT TIPS ALLEGING MATERIAL VIOLATIONS OF LAW.— ‘‘(1) DUTY TO REPORT.—Each nationally recognized statis- tical rating organization shall refer to the appropriate law enforcement or regulatory authorities any information that the nationally recognized statistical rating organization receives from a third party and finds credible that alleges that an issuer of securities rated by the nationally recognized statistical rating organization has committed or is committing a material violation of law that has not been adjudicated by a Federal or State court. ‘‘(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1) may be construed to require a nationally recognized statistical rating organization to verify the accuracy of the information described in paragraph (1).’’. SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER THAN THE ISSUER IN RATING DECISIONS. Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o–7), as amended by this subtitle, is amended by adding at the end the following: ‘‘(v) INFORMATION FROM SOURCES OTHER THAN THE ISSUER.— In producing a credit rating, a nationally recognized statistical rating organization shall consider information about an issuer that the nationally recognized statistical rating organization has, or receives from a source other than the issuer or underwriter, that the nationally recognized statistical rating organization finds cred- ible and potentially significant to a rating decision.’’. SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS. Not later than 1 year after the date of enactment of this Act, the Commission shall issue rules that are reasonably designed to ensure that any person employed by a nationally recognized statistical rating organization to perform credit ratings— Deadline. Regulations. 15 USC 78o–7 note.