The financial reform legislation passed yesterday by the Senate affects credit-rating agencies (CRAs) including the Nationally Recognized Statistical Rating Organizations (NRSROs), according to an e-mail today by Standard & Poor's (S&P) president Deven Sharma. Specifically, he warned the bill repeals the NRSRO exemption to Regulation Fair Disclosure (FD). The NRSRO exemption from the Securities and Exchange Commission's (SEC) Reg FD permitted issuers to share material non-public information with NRSROs without triggering broader disclosure requirements. The bill also repeals Rule 436(g), which allows for the inclusion of ratings in public offering registration statements without NRSRO consent. This could expose NRSROs to "expert" liability if they provide consent for ratings to be included in registration statements, Sharma said. Additionally, the bill changes the pleading standard for federal securities fraud claims against CRAs. "This could potentially lead to more suits as the change may permit claims of federal securities fraud to be brought against a credit rating agency that allegedly 'knowingly or recklessly failed to conduct . . . a reasonable investigation . . . or to obtain reasonable verification' of the data it relies on to determine credit ratings," Sharma said. Before the passage of the bill by Congress, S&P took steps to enhance its transparency, independence and analysis, Sharma said. The bill awaits ratification by President Barack Obama. Write to Diana Golobay.