The civil liability of credit rating agencies : a comparative perspective

Abstract

The aim of this thesis is to explore the potential civil liability of credit rating agencies towards investors and issuers in the European Union following the coming into force of the Regulation 1060/2009 on credit rating agencies and its subsequent amendments. CRAs have been blamed for playing a major role in triggering the 2008 global financial crisis and failing to avert a meltdown in global financial markets, as well as for being overly aggressive in rating Eurozone countries’ creditworthiness and thereby exacerbating the financial crisis. The reforms presented in these regulations have the goal of enhancing the quality of structured products, increasing the transparency of rating methodologies, reducing investor over-reliance on ratings and guaranteeing more stability for sovereign issuers. Among other things, the latest iteration of the regulation on credit rating agencies, in the new Article 35a, establishes a civil liability regime for CRAs, allowing for claims to be made against the rating agencies in certain defined scenarios. However, the European legislator did not create a complete and elaborate European civil liability norm defining all of its constituent elements, rather the CRA Regulation III provides only a rudimentary liability concept for CRAs. This concept has to be complemented by the relevant applicable national law. The ultimate conclusion which this thesis arrives at is that with no decided cases on the matter, there is still much legal uncertainty surrounding the way in which the new civil liability regime will applied in any of the Member States.