Staff members at the SEC may recommend that the agency pursue a civil action against McGraw-Hill’s (MHP) Standard & Poor’s, the company said today in a regulatory filing.
The action could result in a fine and restitution; it would be the first time the rating agencies have been charged with any wrongdoing during the run-up to the mortgage meltdown. The agencies gave high ratings to mortgage securities that turned out to backed by very questionable loans.
The action would focus on a 2007 mortgage debt offering, the company said in the filing.
“On September 22, 2011, The McGraw-Hill Companies, Inc. received a Wells Notice from the Staff of the U.S. Securities and Exchange Commission (the Commission) stating that the Staff is considering recommending that the Commission institute a civil injunctive action against Standard& Poors Ratings Services, then a division of The McGraw-Hill Companies, Inc. (S&P), alleging violations of federal securities laws with respect to S&Ps ratings for a particular 2007 offering of collateralized debt obligations, known as Delphinus CDO 2007-1.In connection with the contemplated action the Staff may recommend that the Commission seek civil money penalties, disgorgement of fees and other appropriate equitable relief.
The Wells Notice is neither a formal allegation nor a finding of wrongdoing.It allows S&P the opportunity to provide its perspective and to address the issues raised by the Staff before any decision is made by the Commission on whether to authorize the commencement of an enforcement proceeding.S&P has been cooperating with the Commission in this matter and intends to continue to do so.”
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