The Securities and Exchange Commission has declined to bring an enforcement action against Moody’s despite alleging that Moody’s engaged in deceptive ratings by deciding to withhold information from the investing public, according to an August 31 Wall Street Journal article by Jessica Holzer entitled “SEC Won’t Sue Moody’s.”
The SEC issued a report stating that a Moody’s credit rating committee had knowledge of an incorrect rating but voted against taking any corrective action, in part out of concern that it would damage Moody’s business reputation. The reason the SEC decided against bringing a fraud action, according to its report, was that the Moody’s vote in question occurred in Europe rather than the U.S., even though its consequences negatively impacted the U.S. securities market and U.S. investors. The SEC’s declination is all the more inexplicable given a statement in its report that the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act expressly provides that U.S. courts have jurisdiction over SEC enforcement actions when conduct at issue includes significant steps, or a foreseeable substantial effect, within the United States, which appears to be the case here.
Moody’s issued a statement that it is “pleased” with the SEC’s no-action decision.
This most recent back-down tops the recent “sweetheart” deals proposed by the SEC (which some federal judges are beginning to question) and supports the belief of many that the SEC is a captive agency.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys have extensive experience in representing investors in securities matters. For further information, please contact us.