Moody's Stock Slides On Probes Of Credit Rating Agencies

DES MOINES, Iowa — Shares of rating agency Moody's Corp. fell Thursday as government agencies began looking into credit rating companies' actions during the financial crisis.

Shares slid $1.13, or 4.4 percent, to $24.79 in morning trading. Shares of McGraw-Hill, which owns credit rating agency Standard & Poor's, declined 82 cents, or 2.9 percent, to $27.38.

The Securities and Exchange Commission scheduled an afternoon meeting to discuss possible regulatory changes that could affect ratings services.

William Blair & Co. analyst John Neff maintained his "Market Perform" rating on the stock in a note to investors released Wednesday. He said the issues scheduled to be discussed by the SEC do not change his long-term positive outlook for Moody's stock.

Among the issues the SEC has planned to discuss include additional disclosure requirements around ratings history and performance and conflicts of interest.

The commission also is considering rescinding an expert opinion exemption that protects ratings services from legal liability for the accuracy of its credit ratings.

Neff said regulatory and legislative calls for increased legal liability are ill-advised. Any changes would likely be procedural, he said.

"Whatever the requirements, we believe Moody's and other rating agencies would simply follow and document the required steps, thus avoiding any real increase in liability, and would do so with little incremental cost," he wrote.

California Attorney General Jerry Brown also said in a statement Wednesday that he plans to launch an investigation into the role credit rating agencies played in fueling the financial crisis. He was to discuss the probe in a statement planned for Thursday morning.

Comments

[chulanow]

It's about time!!!

[greihing]

If you are selling something as one thing when it really is something else, isn't that fraud?? You can bet that someone profited from this fraudulent situation.

I'm not holding to much hope in the SEC's ability to bring the people responsible to task considering the judge just threw out the proposed settlement (or what I would refer to as a "slap on the wrist with no actual punishment given") against Bank of America. (To Judge Rakoff..Thank you sir. You are restoring my faith in our system of justice.) I just hope there are other judges out there that will scrutinize this as deeply as Judge Rakoff.

[StJames]

It's about time. These clowns gave triple A ratings to things they knew were junk. I hope the fines are massive and that some end up in jail or are barred from the financial industry