SEC Fines Six Credit Rating Agencies For Recordkeeping Failures

The U.S. Securities and Exchange Commission (SEC) has charged six credit rating agencies for failing to maintain and preserve electronic communications, resulting in combined penalties exceeding $49 million. The firms—Moody’s Investors Service, S&P Global Ratings, Fitch Ratings, HR Ratings de México, A.M. Best Rating Services, and Demotech—admitted to violating federal securities laws and agreed to improve their compliance policies.

Moody’s and S&P Global were each fined $20 million, Fitch $8 million, HR Ratings $250,000, A.M. Best $1 million, and Demotech $100,000. The SEC required all except A.M. Best and Demotech to retain compliance consultants due to their early efforts to meet recordkeeping requirements.

“Failures to maintain required records can hinder our ability to ensure compliance,” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement. He added that cooperation and efforts to comply have tangible benefits for firms.

The firms were charged with violating Section 17(a)(1) of the Securities Exchange Act of 1934. In addition to financial penalties, they were ordered to cease future violations and undergo comprehensive reviews of their policies on electronic communications retention.