On 31 May 2013, new European legislation was passed to amend the Regulation on credit rating agencies which was first introduced in the aftermath of the financial crisis. Its primary objective is to help discourage the high level of reliance which has typically been placed by market participants on credit ratings. However, amongst its most controversial provisions, it introduces a new cause of action giving rise to civil liability on the part of credit rating agencies where losses are suffered by investors or issuers as a result of breaches of the Regulation caused by the agency’s gross negligence.
In an article recently published in Law and Financial Markets Review, Senior Associate Harry Edwards looks at the detail of the new cause of action and considers the tensions it creates with the wider objectives of the legislation. Click here to read the article.
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