Feeds

SEC doesn't do a Moody

Credit rating allegations? Not our job

Beginner's guide to SSL certificates

The Securities and Exchange Commission is dropping an investigation into alleged fraudulent behaviour at ratings agency Moody's because it is not sure if it has legal jurisdiction over the company.

Moody's was accused of awarding wrongly high ratings to various constant proportion debt obligation notes - the infamous structured debt products which turned out to be not much more than bundles of dodgy US mortgages re-packaged to look like they were almost risk-free.

The SEC said: "Because of uncertainty regarding a jurisdictional nexus between the United States and the relevant ratings conduct, the Commission declined to pursue a fraud enforcement action in this matter."

The problem came to light when the FT got hold of internal documents showing Moody's had been aware it had been wrongly awarding AAA ratings.

The SEC Report of Investigation said that Moody's discovered in early 2007 that it was ramping up ratings by 1.5 to 3.5 notches. But the company decided not to take any action because it didn't want to damage its own reputation. Moody's at the time blamed a computer error.

The SEC said it was warning ratings agencies of the importance of proper internal procedures and controls to stop them issuing incorrect ratings.

The regulator said: “It is crucial that nationally recognized statistical rating organizations take steps to assure themselves of the accuracy of those statements and that they have in place sufficient internal controls over the procedures they use to determine credit ratings.”

The SEC said new security laws meant it would have no problem taking action against a firm in future for failing to follow a proper methodology for setting ratings. It warned it would take anti-fraud action against companies within the US or whose actions would have an impact within the US.

Moody's issues ratings for all sorts of financial instruments including company bonds and even countries' sovereign debt. Some investors, like pension funds, can only invest in products with high, AAA ratings. ®

Remote control for virtualized desktops

More from The Register

next story
Facebook pays INFINITELY MORE UK corp tax than in 2012
Thanks for the £3k, Zuck. Doh! you're IN CREDIT. Guess not
Big Content outs piracy hotbeds: São Paulo, Beijing ... TORONTO?
MPAA calls Canadians a bunch of bootlegging movie thieves
Google Glassholes are UNDATEABLE – HP exec
You need an emotional connection, says touchy-feely MD... We can do that
YARR! Pirates walk the plank: DMCA magnets sink in Google results
Spaffing copyrighted stuff over the web? No search ranking for you
Just don't blame Bono! Apple iTunes music sales PLUMMET
Cupertino revenue hit by cheapo downloads, says report
Hungary's internet tax cannot be allowed to set a precedent, says EC
More protests planned against giga-tariff for Tuesday evening
US court SHUTS DOWN 'scammers posing as Microsoft, Facebook support staff'
Netizens allegedly duped into paying for bogus tech advice
Feds seek potential 'second Snowden' gov doc leaker – report
Hang on, Ed wasn't here when we compiled THIS document
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
New hybrid storage solutions
Tackling data challenges through emerging hybrid storage solutions that enable optimum database performance whilst managing costs and increasingly large data stores.
Website security in corporate America
Find out how you rank among other IT managers testing your website's vulnerabilities.