SEC Probes Credit Agencies Over Subprime Loans

Law360, New York (September 26, 2007, 12:00 AM EDT) -- The U.S. Securities and Exchange Commission is investigating whether credit rating agencies followed proper procedures regarding conflicts-of-interest when rating subprime mortgage-backed securities.

SEC Chairman Christopher Cox told the U.S. Senate Committee on Banking, Housing and Urban Affairs on Wednesday that the commission has been examining whether credit rating agencies were influenced in rating subprime residential mortgage-backed securities since recent events unfolded in the collapse of the mortgage market.

The major rating agencies—Standard & Poor’s, Moody’s Investors Service, and Fitch Ratings—are paid by an issuer to rate...
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