On January 26, the Securities and Exchange Commission (SEC) presented Congress with a 48-page report about its ongoing investigation into the function and role that credit rating agencies play in the securities market.

According to the report, federal regulators are scrutinizing allegations of unfair or uncompetitive practices by the three largest credit rating agencies, Moody’s Investors, Standard & Poor’s, and Fitch Ratings. The commission is studying ways to make the industry more open to competition. In addition, the SEC is investigating potential conflicts of interest, such as those created when issuers pay for ratings, and considering whether agencies should be required to disclose more information about their ratings decisions.

Congress directed the SEC to address the need for oversight of the credit rating industry as part of last summer’s corporate reform legislation. Credit rating agencies came under fire when the major firms were still giving good investment ratings to Enron just days before the energy-trading company filed for bankruptcy.

The SEC will issue proposed new rules after evaluating and reviewing public comment of a "concept release," which should be published in 60 days.