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Standard & Poor’s Corp. has agreed to pay a total of about $77 million to settle charges of fraudulent misconduct in its ratings of certain commercial mortgage-backed securities, the U.S. Securities and Exchange Commission said Wednesday.
The New York-based rating agency, a unit of McGraw Hill Financial Inc., agreed to pay more than $58 million to settle the SEC’s charges, plus an additional $12 million to settle a parallel case by the New York Attorney General’s office and another $7 million to settle a case filed by the Massachusetts Attorney General’s office.
The rating agency was charged with a series of federal securities law violations. Andrew J. Ceresney, director of the SEC enforcement division, said in a statement. “Investors rely on credit rating agencies like Standard & Poor’s to play it straight when rating complex securities” such as commercial mortgage-backed securities, he said.
“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.”
S&P said in a statement the settlements do not affect any outstanding credit ratings “or the manner in which S&P Ratings conducts credit analysis under the relevant criteria.”
The statement said also, “S&P Ratings is pleased to have concluded these matters. It takes compliance with regulatory obligations very seriously and continues to make investments in people and technology to strengthen its controls and risk management throughout the organization.”
A mining company has reached a $137.5 million settlement of derivative litigation stemming from its 2013 acquisition of two firms in which some company directors and officers had been charged with conflict of interest.