The Securities and Exchange Commission today announced that it has dropped a fraud case agenst ratings agency Moody’s “because of uncertainty regarding a jurisdictional nexus between the United States and the relevant ratings conduct” related to the recent passage of the Dodd-Frank financial reform bill.
Turns out Dodd-Frank limits the SEC’s ability to pursue Moody’s. The regulator nevertheless gave the ratings agency a hefty slap on the wrist for not adjusting credit ratings even after it had found them to be inaccurate.
The company had determined that a computer error had caused one of Moody’s credit ratings to come out between 1.5 and 3.5 increments higher than it should have. “Nevertheless, shortly thereafter during a meeting in Europe, an MIS [Ed.: Moody’s] rating committee voted against taking responsive rating action, in part because of concerns that doing so would negatively impact MIS’s business reputation.”
Certainly objectionable, but apparently not subject to SEC intervention.
(h/t Street Sweep)