Rating Agencies to Face Sovereign-Debt Curbs in EU

Draft plan would let investors sue credit raters for malpractice or gross negligence.

Credit rating companies face curbs on when they can assess government debt and restrictions on their ownership under draft plans agreed upon by the European Union to limit the industry’s influence and tackle conflicts of interest.

Investors will also get the right to sue ratings companies if they lose money because of malpractice or gross negligence in the plans agreed upon yesterday by lawmakers from the European Parliament and Cyprus, which holds the rotating presidency of the EU.

Curbing Ownership

The EU also plans to block any investor from owning stakes of more than 5 percent in more than one rating company, Gauzes said in an interview after the meeting.

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