S&P hit with $77m charge

Rating agency Standard & Poor’s (S&P) will pay $77 million to the Securities and Exchange Commission (SEC) to settle three cases involving fraudulent misconduct.

The violations related to fraudulent misconduct in S&P’s ratings of certain commercial mortgage-backed securities (CMBS).

S&P will pay more than $58 million to settle the SEC’s charges, plus an additional $19 million to settle parallel cases announced today by the New York Attorney General’s office ($12 million) and the Massachusetts Attorney General’s office ($7 million).

“Investors rely on credit rating agencies like Standard & Poor’s to play it straight when rating complex securities like CMBS,” said Andrew Ceresney, director of the SEC enforcement division. “But Standard & Poor’s elevated its own financial interests above investors by loosening its rating criteria to obtain business and then obscuring these changes from investors. These enforcement actions, our first-ever against a major ratings firm, reflect our commitment to aggressively policing the integrity and transparency of the credit ratings process.”