U.S. regulators could file civil fraud charges against some credit-rating agencies for their role in developing mortgage-bond deals that helped bring about the financial crisis, the Wall Street Journal reported, citing people familiar with the matter.
The Journal said the Securities and Exchange Commission was reviewing the conduct of companies including McGraw Hill’s Standard and Poor’s and Moody’s Investors Service owned by Moody’s Corp on at least two mortgage-bond deals.
The paper said a Standard & Poor’s spokeswoman declined to comment, and it quoted Michael Adler, a spokesman for Moody’s, as saying: “Although Moody’s is uncertain as to what The Wall Street Journal is referring, we would certainly cooperate with any requests we receive from the SEC.”
Reuters could not reach Standard and Poor’s, the SEC or Moody’s for comment.
The SEC is considering whether the credit-ratings firms failed to do enough research to be able to rate adequately the pools of subprime mortgages and other loans that underpinned the mortgage-bond deals, the paper said.
In May, the SEC sought public comment on proposals that the credit-rating agencies needed to reveal more about how they judge financial products and how those ratings perform over time.
(Reporting by Vaishnavi Bala in Bangalore; Editing by Hans-Juergen Peters)