SEC says rating agencies failed to manage conflicts of interest

Daily news headlines

NEW YORK – Credit rating agencies rushed through ratings for in-demand complex structured products, while failing to effectively divide their analysis from the business side, according to Christopher Cox, chairman of US regulator the Securities and Exchange Commission (SEC).

Speaking in a television interview on Bloomberg Television on Monday, Cox revealed the direction of the findings from the SEC probe on rating agency conduct that will be released next week. Government investigators have spent months sifting through millions of pages of internal records and e-mails related to the ratings of subprime mortgage-related securities.

“The public will see that there have been significant problems. There have been instances in which there were people both pitching the business, debating the fees and were involved in the analytical side,” said Cox.

Cox said ratings analysts were deluged with requests that were highly profitable to the agencies and their clients, and “the volume of work taxed the staff in ways that caused them to cut corners, that caused them to deviate from their models”.

The comments follow SEC proposals last month for new rules for rating agencies, and come only days after European commissioner for the internal market Charlie McCreevy commented they would face regulation in the European Union.

  • LinkedIn  
  • Save this article
  • Print this page  

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: