WASHINGTON - Federal regulators proposed new rules yesterday designed to stem conflicts of interest, expand disclosure for Wall Street's credit-rating industry, and flag the ratings of more complex securities.

The Securities and Exchange Commission is seeking to make the ratings business more transparent, while also encouraging new firms to enter. The three firms that dominate the $5-billion-a-year industry - Standard & Poor's, Moody's Investors Service and Fitch Ratings Inc. - have been widely criticized for failing to identify risks in subprime-mortgage investments.

The most contentious element of the proposal would require ratings of complex securities, such as those underpinned by mortgages or student loans, to be distinguished from those for more traditional securities, like corporate or municipal bonds. It drew an opposing vote from one of the three SEC commissioners at a public meeting, and a swift condemnation from a major Wall Street lobbying group.

Amid the turmoil that has gripped the credit markets in recent months, the three agencies have downgraded thousands of securities backed by mortgages as home-loan delinquencies have soared and the value of those investments has plummeted. The downgrades have contributed to hundreds of billions in losses and write-downs at major banks and investment firms.

The SEC proposal did not go far enough to address the rating agencies' role in the mortgage crisis, according to the National Community Reinvestment Coalition. The consumer group said new rules also were needed to govern how the rating agencies were paid, and it called for the companies' licenses to be suspended if they engaged in unfair practices.

The vote was 3-0 to tentatively approve the proposed rules related to disclosure and conflicts of interest. They would ban the rating agencies from advising the investment banks on how to package securities to secure favorable ratings, and gifts of more than $25 from clients would be prohibited.

The votes by the SEC opened the proposal to a 30-day public comment period.

The proposed rules also would:

Require rating agencies to make all their ratings publicly available to allow their performance to be compared.

Require agencies to disclose how frequently ratings are reviewed.