It looks like the SEC may take legal action against Standard & Poor’s for a 2007 CDO (collateralized debt obligation) rating, The New York Times reports.
While mis-rated CDOs have largely blamed for the 2008 financial crises, the agencies that set those ratings have not. The Wells notice suggests that now, for the first time, the SEC will bring civil charges against a ratings agency in hopes of collecting “civil money penalties, disgorgement of fees or other actions.”
McGraw Hill, S&P’s parent company, said they received a Wells Notice, a letter announcing that the SEC plans to take action against the S&P ratings agency, on Thursday. The company does have a chance to respond, and rebut the argue against the claims that the SEC makes in the letter. If S&P argues successfully, the SEC will not go forward with its suit.
For its part, S&P has said it will cooperate with any investigation.
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