Six Credit Rating Agencies Fined for Recordkeeping Failures

Six credit rating agencies settled SEC charges for failing to preserve electronic communications.

In separate Orders (linked below), the SEC found that the agencies' employees, including senior executives, used off-channel communication, including on platforms like WhatsApp, to communicate with clients on a variety of credit rating activities. The SEC emphasized that the failure to retain these communications likely impaired the SEC's ability to conduct effective investigations into the firms' compliance with federal securities laws. 

The SEC concluded that the agencies violated SEA Section 17(a)(1) ("Records and Reports") and Rule 17g-2(b)(7) ("Records to be made and retained by nationally recognized statistical rating organizations").

To settle the charges, the agencies agreed to (i) cease and desist from future violations, (ii) a censure and (iii) pay civil money penalties in the amounts of $100,000; $250,000; $1 million; $8 million; $20 million; and $20 million respectively. The SEC required four of the agencies to retain a compliance consultant.