Document ID: SEC-2010-0582-0001
Agency: sec
Document Type: Notice
Title: Administrative Proceeding: Dagong Global Credit Rating Co., Ltd.
Posted Date: 2010-04-20T04:00Z

[Federal Register: April 20, 2010 (Volume 75, Number 75)]
[Notices]               
[Page 20645-20646]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20ap10-92]                         

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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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