- Posted July 25, 2014
- Tweet This | Share on Facebook
Action against S&P over ratings considered by SEC
WASHINGTON (AP) - Standard & Poor's said Wednesday that regulators have told the rating agency they are considering taking civil enforcement action against it over ratings it gave to six deals in 2011 involving securities tied to commercial mortgages.
S&P's parent McGraw Hill Financial Inc. disclosed in a regulatory filing that it has received a so-called "Wells Notice" from staff of the Securities and Exchange Commission. The notice indicates the staff will recommend to the five-member commission that it pursue action against S&P for alleged violations of securities laws.
Under SEC procedure, S&P will be able to make its case to the agency on the issues raised by the notice.
S&P has been cooperating with the SEC in the matter and will continue to do so, New York-based McGraw Hill said.
SEC spokeswoman Gina Talamona declined to comment.
The three big agencies - S&P, Moody's and Fitch - have been blamed for helping fuel the 2008 financial crisis by giving high ratings to risky mortgage securities. Those investments later soured when the housing market went bust. High ratings from the agencies made it possible for banks to sell trillions in risky investments. Some investors, including pension funds, can only buy securities that carry high credit ratings.
In a separate case, the Justice Department filed civil charges against S&P in February 2013, accusing it of failing to warn investors that the housing market was collapsing in 2006 because it would be bad for business. S&P knowingly inflated its ratings of risky mortgage investments, the Justice Department said. It's seeking $5 billion in penalties against the company.
S&P has denied the allegations, saying its ratings were based on a good-faith assessment of the performance of home mortgages during a time of market turmoil. S&P has said the government filed the lawsuit against it as "retaliation" for its downgrade of the U.S. credit rating in 2011.
Published: Fri, Jul 25, 2014
headlines Oakland County
headlines National
- 50 Years of Service: ABA has been a ‘stalwart ally’ for LSC funding
- ACLU and BigLaw firm use ‘Orange is the New Black’ in hashtag effort to promote NY jail reform
- Biden recalls time he bluffed knowledge of torts case and why he changed his mind about civil-trial work
- Lawyers’ ‘barrage of personal attacks’ on opponents started with tissue-box toss, appeals court says
- Longtime prosecutor resigns after judge tosses him from case, citing Perry Mason-type revelations
- 24% of law students expect to work in public service, survey says