Chip Somodevilla
The U.S. Securities and Exchange Commission settled charges with six credit rating companies, including Moody’s (NYSE:MCO) and S&P Global (NYSE:SPGI), for alleged failures to maintain and preserve electronic communications. The six firms agreed to pay combined civil penalties of $49M.
The regulator first targeted Wall Street banks in identifying violations that occurred when their employees used their personal devices and apps such as WhatsApp to conduct business. The investigation then spread to other parts of the financial sector. In February, 16 financial firms agreed to pay $81M in to settle the probes into their electronic communications. And last month, 26 broker-dealers agreed to pay $393M to settle similar probes.
In Tuesday’s SEC announcement:
- Moody’s (MCO) Investors Service and S&P Global (SPGI) Ratings each agreed to pay $20M.
- Fitch Ratings agreed to pay an $8M penalty.
- HR Ratings de México agreed to pay $250K.
- A.M. Best Rating Services agreed to pay a $1M penalty.
- Demotech will pay a $100K penalty.
Each of the companies, except for A.M. Best and Demotech, is required to hire a compliance consultant. Those two companies had already made significant efforts to comply with record-keeping requirements relatively early, and won’t be required to retain a consultant, the SEC said.
“We have seen repeatedly that failures to maintain and preserve required records can hinder the staff’s ability to ensure that firms are complying with their obligations and the Commission’s ability to hold accountable those that fall short of those obligations, often at the expense of investors,” said Sanjay Wadhwa, deputy director of SEC’s Division of Enforcement.
