The SEC examined all 10 firms registered Nationally Recognized Statistical Rating Organization (.pdf 23 pages) and found all 10 had “apparent failures”. The SEC has requested remediation plans from each of the agencies within 30 days and is continuing its investigation. The issues found included “apparent failures in some instances to follow ratings methodologies and … Read more »
Tag: Nationally Recognized Statistical Rating Organizations
Credit Rating Agency Investigated for Fraud
The SEC brought an action against LACE Financial for issues with its independence. We also learned that the SEC had investigated whether rating agency Moody’s Investors Service, Inc. violated the registration provisions or the antifraud provisions of the federal securities laws. Moody’s was working on a rating for some new European securities. They ended up … Read more »
Credit Rating Agencies and Conflicts of Interest
Personally, I place a big chunk of blame on the Credit Rating Agencies for the Great Panic of 2008. They were throwing AAA ratings at piles of garbage. There is an inherent conflict in the rater being paid by the security issuer instead of the security purchaser. They are beholden to the customer and the … Read more »
SEC Attacks the Rating Agencies
The SEC took its first swing at the failure of credit rating agencies by serving a Wells Notice on Moody’s Investor Service. At issue, according to the Moody’s filing, is the determination in 2007 that members of one of its European rating committees “engaged in conduct contrary to Moody’s Code of Professional Conduct.” Members of … Read more »