Kit Addleman in The New York Times: S.E.C. Faults Credit Raters, but Doesn't Name Them


WASHINGTON — An examination of credit ratings agencies by the Securities and Exchange Commission found repeated instances of the companies failing to follow their own procedures or to manage conflicts of interest adequately, according to an S.E.C. staff report issued Friday.

The examinations were mandated in the Dodd-Frank regulatory law passed last year after numerous investigations into the causes of the financial crisis. Several of those inquiries found that the agencies had issued inaccurate reports, failed to report or manage conflicts of interest and appeared to put generating revenue ahead of rigorous financial analysis...

“The takeaway for both individual investors and institutions is to always have a skeptical eye when looking at ratings agencies,” said Katherine Addleman, a partner at Haynes and Boone.

The findings have not resulted in any enforcement actions by the agency, but staff members could refer some or all of the findings to the enforcement division for further investigation. Ms. Addleman said the report was typical of those issued after the S.E.C. conducts a sweep of brokerage firms to check on compliance with regulations. After those inquiries, it often outlines areas where firms should bring themselves into compliance or risk enforcement action.

Excerpt from The New York Times, Sept. 30, 2011. To view the full article, click here.

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