US SEC holds 6 credit rating agencies accountable for significant recordkeeping failures

(MENAFN) The US Securities and Exchange Commission (SEC) announced on Tuesday that it has charged six credit rating agencies with significant recordkeeping failures. According to the SEC, the firms have admitted to the facts outlined in the SEC orders and have acknowledged that their actions violated federal securities laws regarding recordkeeping. As part of the resolution, the agencies have agreed to pay a total of more than USD49 million in civil penalties.

The credit rating agencies involved include Moody’s Investors Service, Inc., and S&P Global Ratings, each of which will pay a USD20 million civil penalty. Fitch Ratings is required to pay an USD8 million penalty. Other agencies affected are HR Ratings de México, S.A. de C.V., which will pay USD250,000, A.M. Best Rating Services, Inc., which will pay USD1 million, and Demotech, Inc., with a USD100,000 penalty.

Additionally, the SEC has mandated that, except for A.M. Best and Demotech, the affected agencies must retain a compliance consultant. This requirement aims to address and rectify the deficiencies in their recordkeeping practices and ensure compliance with federal regulations.

Sanjay Wadhwa, deputy director of the SEC’s Division of Enforcement, emphasized that failures to maintain and preserve required records can obstruct the SEC's ability to verify compliance and hold firms accountable. These lapses, he noted, can negatively impact investors by compromising oversight and enforcement capabilities.

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