SEC Obtains Final Judgment on Former Credit Rating Agency for Internal Control Failures

The U.S. District Court for the Southern District of New York issued a final judgment in a case involving SEC charges against a credit ratings agency for violating disclosure and internal controls provisions related to commercial mortgage-backed securities ("CMBS").

As previously covered, the SEC found that the ratings agency allowed analysts to make undisclosed adjustments to the agency's model for calculating the rating for CMBS transactions. In addition, the SEC found that the ratings agency failed to establish and enforce an effective internal control structure governing the adjustments for certain transactions.

In the final judgment, the Court ordered the ratings agency to pay a civil penalty of $1,150,000, to be paid within 30 days.