The Securities and Exchange Commission voted unanimously to propose new rules and amendments that would put new controls on how credit rating agencies operate.

Among other things, the rules are expected to keep executives or employees of credit rating agencies from going to work for the companies whose credit they have rated, for at least one year. The proposals are also likely to block agencies from having a person who markets its products or services also participate in its ratings.

The proposed rules will implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as extend existing SEC rules.

“In passing the Dodd-Frank Act, Congress noted that credit ratings applied to structured financial products proved inaccurate and contributed significantly to the mismanagement of risks by financial institutions and investors,” said SEC Chairman Mary L. Schapiro. “Our proposed rules are intended to strengthen the integrity and improve the transparency of credit ratings.”

Under the SEC’s proposal, ratings agencies would be required to institute internal controls governing how credit ratings are reached; and require the agencies to report annually to the SEC on those controls.

The rules also seek to prevent an agency's sales and marketing operations from affecting its ratings.

Under the proposed rules, an agency would be prohibited from issuing or maintaining a credit rating where an employeewho participates in the sales or marketing of a product or service also participates in determining or monitoring a credit rating or developing or approving procedures used for determining a credit rating.

The registration of an agency could be suspended if it is determined to have committed a violation of the conflict of interest rule.

Comments by chairman Schapiro can be found here.

More details on the proposed rules can be found here.

The SEC’s proposal seeks public comments that should be received within 60 days of its publication in the Federal Register.