[Federal Register Volume 75, Number 75 (Tuesday, April 20, 2010)]
[Notices]
[Pages 20645-20646]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9052]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 61906; File No. 3-13860]
Order Instituting Administrative Proceedings Pursuant to Section
15E(a)(2)(A)(ii) of the Securities Exchange Act of 1934 and Notice of
Hearing; In the Matter of the Application of Dagong Global Credit
Rating Co., Ltd.
April 14, 2010.
Dagong Global Credit Rating Co., Ltd. (``Dagong''), a credit rating
agency based in Beijing, China, submitted an application with the
Securities and Exchange Commission (``Commission'') for registration as
a nationally recognized statistical rating organization (``NRSRO'')
pursuant to section 15E(a) of the Securities Exchange Act of 1934
(``Exchange Act'') and Rule 17g-1 thereunder.
[[Page 20646]]
Pursuant to section 15E(a)(2)(A) of the Exchange Act, not later
than 90 days (or within such longer period as to which the applicant
consents) after the application for registration is furnished to the
Commission, the Commission shall, by order, either grant such
registration or institute proceedings to determine whether such
registration should be denied. Under section 15E(a)(2)(C), the
Commission shall grant registration as an NRSRO to an applicant if the
Commission finds that the requirements of Section 15E of the Exchange
Act are satisfied and unless the Commission finds (in which case the
Commission shall deny such registration) that, among other things, if
the applicant were so registered, its registration would be subject to
suspension or revocation under section 15E(d) of the Exchange Act.
If the Commission institutes proceedings to determine whether an
application for registration should be denied, section
15E(a)(2)(B)(i)(I) of the Exchange Act requires that the Commission
shall include notice of the grounds for denial under consideration and
an opportunity for a hearing. Section 15E(a)(2)(B)(i)(II) provides that
the proceedings shall be concluded not later than 120 days after the
date on which the application for registration is furnished to the
Commission. The Commission may extend the time for conclusion of such
proceedings, pursuant to section 15E(a)(2)(B)(iii), for not longer than
90 days, if it finds good cause for such extension and publishes its
reasons for such finding, or for such longer period as to which the
applicant consents. Section 15E(a)(2)(B)(ii) provides that, at the
conclusion of such proceedings, the Commission, by order, shall grant
the application or deny the application for registration.
After furnishing its application on December 24, 2009, Dagong
consented to two extensions of time for the Commission to act on the
application. The first extension was for seven days and the second
extension was fourteen additional days. Under Section 15E(a)(2)(B), the
Commission is required to act on the application no later than April
14, 2010, unless further extensions are granted by Dagong.
Dagong has provided the following information in connection with
its application to register as an NRSRO. Dagong is located in Beijing,
China. Dagong has no physical presence in the United States, does not
rate any U.S. companies, and has no U.S. persons subscribing to its
ratings. When submitting certifications from companies that rely on its
ratings for investment purposes, as required for registration, Dagong
relied exclusively on companies located in China.
In addition, to date the Commission has been unable to determine
whether, under local law requirements applicable to Dagong, Dagong
would be able to comply with the provisions in Section 17 of the
Exchange Act, and the rules thereunder, relating to making its books
and records available for Commission examination, producing books and
records to the Commission, and furnishing reports to the Commission.
Accordingly, pursuant to section 15E(a)(2)(A)(ii) of the Exchange
Act, the Commission is instituting proceedings to determine whether
Dagong's application for registration as a nationally recognized
statistical rating organization should be denied. In these proceedings,
grounds for denial under consideration will include:
(I) Whether Dagong has a sufficient connection with U.S.
interstate commerce to register as an NRSRO, and thereby invoke the
regulatory and oversight authority of the Commission; and
(II) Whether Dagong's application for registration should be
denied pursuant to Section 15E(a)(2)(C)(ii)(II) on the grounds that,
if registered as an NRSRO, Dagong would be subject to having its
registration suspended or revoked under section 15E(d)(1) of the
Exchange Act because, in light of requirements in its home
jurisdiction, Dagong would be unable to comply with provisions of
the U.S. securities laws and rules (an act identified in Section
15(b)(4)(D) of the Exchange Act), including, in particular, Section
17 of the Exchange Act and Rules 17g-2 and 17g-3 thereunder.
Given the nature of the issues raised in the application, the
Commission is currently of the view that a hearing on the basis of
written submissions will sufficiently allow the parties to address
these issues.
Accordingly, it is ordered, that proceedings under section
15E(a)(2)(A)(ii) of the Exchange Act be and hereby are instituted to
determine whether the application of Dagong should be denied.
It is further ordered that a hearing shall be conducted on the
basis of written submissions (and in accordance with the Commission's
Rules of Practice, 17 CFR 201.100, et seq., except as otherwise
provided) addressing issues of law or fact in dispute and legal
arguments supporting the parties' positions. Dagong and the interested
divisions or offices of the Commission shall each file an opening
submission not later than May 5, 2010 and a responsive submission not
later than May 17, 2010. Each party shall simultaneously serve
according to the Rules of Practice on the other party a copy of each
submission. Any requests for extensions of time (which shall be made
pursuant to Rule of Practice 161), and any requests to submit oral
testimony shall be considered contingent upon Dagong's consent to a
reasonable extension of time pursuant to section 15E(a)(2)(B)(iii) of
the Exchange Act in addition to the 90-day extension the Commission is
hereby ordering as set forth below.
It is further ordered that the time period for the conclusion of
all proceedings, after which the Commission is required to grant or
deny the application, is extended for an additional 90 days pursuant to
section 15E(a)(2)(B)(iii) of the Exchange Act to July 22, 2010. The
Commission finds good cause for this 90-day extension on the basis that
the application raises substantial legal questions, including questions
of foreign law, which necessitate granting the parties sufficient time
to prepare written submissions and the Commission sufficient time to
consider those submissions.
It is further ordered that any person who seeks to participate on a
limited basis, or amicus curiae, pursuant to Rules of Practice 210(c)
and (d), shall file a motion for leave to participate, together with
the proposed submission, with the Secretary of the Commission not later
than May 5, 2010.
It is further ordered that the Secretary of the Commission shall
serve this Order forthwith upon Dagong in accordance with Rule of
Practice 141; and that notice to all other persons shall be given by
publication of this Order and Notice in the Federal Register; and that
this Order and Notice and any subsequent orders granting or denying the
application shall be posted on the Commission's Web site at http://www.sec.gov and published in the SEC Docket.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2010-9052 Filed 4-19-10; 8:45 am]
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