Summary
S&P Global Inc. (then McGraw Hill Financial, Inc.) disclosed on July 23, 2014, that it had received a "Wells Notice" from the U.S. Securities and Exchange Commission (SEC) staff. This notice indicates a preliminary determination by the SEC staff to recommend enforcement action against Standard & Poor's Ratings Services (S&P) for alleged violations of federal securities laws related to its ratings of six commercial mortgage-backed securities (CMBS) transactions from 2011 and subsequent public disclosures. The potential enforcement action could seek remedies such as a cease-and-desist order, disgorgement, pre-judgment interest, civil penalties, and sanctions against S&P's registration as a Nationally Recognized Statistical Rating Organization (NRSRO). The Wells Notice is not a formal finding of wrongdoing, but an opportunity for S&P to present its views before the SEC makes a final decision. S&P stated its intention to cooperate fully with the SEC investigation.
Key Highlights
- 1McGraw Hill Financial, Inc. (now S&P Global Inc.) received a Wells Notice from the SEC staff on July 22, 2014.
- 2The notice alleges potential violations of federal securities laws by Standard & Poor's Ratings Services (S&P).
- 3The alleged violations pertain to S&P's ratings of six commercial mortgage-backed securities (CMBS) transactions issued in 2011.
- 4The SEC staff may recommend sanctions including a cease-and-desist order, disgorgement, civil penalties, and revocation/suspension of S&P's NRSRO registration.
- 5The Wells Notice is a preliminary step, allowing S&P to respond before the SEC makes a final decision.
- 6S&P has been cooperating with the SEC and intends to continue doing so.