It is certainly high time for credit rating agencies to make their methodologies completely transparent, consultative and objective so that they accurately reflect the true picture
Despite rising to become the world’s fifth-largest economy from 12th position in the last 15 years (2008-23), with
Insurers: Seeking Redemption Via Credit Ratings thisdaylive.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from thisdaylive.com Daily Mail and Mail on Sunday newspapers.
A New York federal judge Wednesday trimmed the U.S. Securities and Exchange Commission's enforcement action accusing Morningstar Credit Ratings LLC of making undisclosed "adjustments" to ratings for $30 billion worth of commercial mortgage-backed securities, or CMBS, transactions.
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On February 16, 2021, the Securities and Exchange Commission (“SEC”) filed a civil complaint against Morningstar Credit Ratings LLC (“Morningstar”), a credit rating agency, alleging violations of the disclosure and internal controls provisions of the federal securities laws based on Morningstar’s ratings of commercial mortgage-backed securities (“CMBS”).
1 In bringing this complaint, the SEC stressed the importance of internal controls measures and full disclosure of rating methodologies for credit rating agencies.
I. Allegations
According to the complaint, from 2015 to 2016, Morningstar permitted credit rating analysts to make undisclosed adjustments in its rating methodology for thirty CMBS transactions totaling $30 billion. Morningstar’s models stress-tested cash flows and valuation measures based on different economic environments, and Morningstar ultimately failed to disclose that its analysts could