SEC Says 6 Credit Rating Agencies Failed to Preserve Electronic Communications

The Securities and Exchange Commission (SEC) has charged six credit rating agencies with “significant” recordkeeping failures in maintaining and preserving electronic communications.

The firms have agreed to pay civil penalties and to implement improvements to their compliance policies and procedures, the regulator said in a Tuesday (Sept. 3) press release.

The six companies include A.M. Best Rating Services, Demotech, Fitch Ratings, HR Ratings de México, Moody’s Investors Service and S&P Global Ratings, according to the release.

Sanjay Wadhwa, deputy director of the SEC’s Division of Enforcement, said in the release that companies’ failures to preserve the required records can hinder the efforts of both their own staff and the SEC to ensure firms are complying with their obligations.

“In today’s actions, the Commission once again makes clear that there are tangible benefits to firms that make significant efforts to comply and otherwise cooperate with the staff’s investigations,” Wadhwa said.

Reached for comment by PYMNTS, HR Ratings said in an emailed statement: “Over the past year, HR Ratings has significantly strengthened its electronic recordkeeping policies and procedures. The settlement with the SEC underscores our firm commitment to upholding regulatory standards in every jurisdiction where we operate.”

A Moody’s spokesperson said in a statement emailed to PYMNTS: “Moody’s is fully committed to upholding our regulatory record-keeping obligations, and we are pleased to put this matter behind us.”

A.M. Best said in a statement provided to PYMNTS that the company is pleased that the matter has been resolved and that the SEC recognized A.M. Best’s efforts to comply with recordkeeping requirements.

“A.M. Best places great importance on our regulatory responsibilities and remains committed to the integrity of our ratings process and high-quality independent credit ratings,” the firm said in the statement.

S&P Global Ratings said in a Tuesday press release that the company is pleased to have concluded the matter and takes its regulatory obligations seriously.

In a statement emailed to PYMNTS, the firm added: “S&P Global Ratings is pleased the SEC acknowledged its remedial acts and cooperation with the SEC staff.”

Demotech and Fitch Ratings did not immediately reply to PYMNTS’ request for comment.

All six credit rating agencies will pay a civil penalty, while four are also required to retain a compliance consultant. Two companies — A.M. Best and Demotech — are not required to retain such a consultant because they “engaged in significant efforts to comply with the recordkeeping requirements relatively early” and otherwise cooperated with the SEC investigation, the release said.