STATE OF MIND IN PRIVATE ACTIONS.

SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.(a) Accountability.—Section 15E(m) of the Securities Exchange Act of 1934 (15 U.S.C. 78o–7(m)) is amended to read as follows:“(m) Accountability.—“(1) In general.—The enforcement and penalty provisions of this title shall apply to statements made by a credit rating agency in the same manner and to the same extent as such provisions apply to statements made by a registered public accounting firm or a securities analyst under the securities laws, and such statements shall not be deemed forward-looking statements for the purposes of section 21E.“(2) Rulemaking.—The Commission shall issue such rules as may be necessary to carry out this subsection.”.(b) State of Mind.—Section 21D(b)(2) of the Securities Exchange Act of 1934 (15 U.S.C. 78u–4(b)(2)) is amended—(1) by striking “In any” and inserting the following:“(A) In general.—Except as provided in subparagraph (B), in any”; and(2) by adding at the end the following:124 STAT. 1884 “(B) Exception.—In the case of an action for money damages brought against a credit rating agency or a controlling person under this title, it shall be sufficient, for purposes of pleading any required state of mind in relation to such action, that the complaint state with particularity facts giving rise to a strong inference that the credit rating agency knowingly or recklessly failed—“(i) to conduct a reasonable investigation of the rated security with respect to the factual elements relied upon by its own methodology for evaluating credit risk; or“(ii) to obtain reasonable verification of such factual elements (which verification may be based on a sampling technique that does not amount to an audit) from other sources that the credit rating agency considered to be competent and that were independent of the issuer and underwriter.”.