SEC considering action against S&P over ratings

Published on NewsOK Modified: July 23, 2014 at 6:21 pm •  Published: July 23, 2014

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.

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