Feb. 7 (Bloomberg) -- New York Attorney General Andrew Cuomo said ``supposed reforms'' by Standard & Poor's and Moody's Investors Service, which gave high ratings to subprime debt that later plummeted, won't stop his investigation of the companies.

``Both S&P and Moody's are attempting to make piece-meal changes that seem more like public relations window dressing than systemic reform,'' Cuomo said in a statement today, calling the reforms ``too little, too late.''

Cuomo plans to focus on ``the role played by the ratings agencies in the mortgage meltdown,'' he said in the statement. The companies and Fitch Ratings have been scrutinized by regulators and lawmakers for giving high ratings to subprime- mortgage securities that subsequently sank in value and for reacting too slowly as defaults rose.

Cuomo subpoenaed S&P, the world's largest credit rating service, and Fitch Ratings in September as part of his mortgage probe. S&P is responding to the subpoena it received in September and is ``interacting with the attorney general's office,'' S&P spokesman Steven Weiss said.

Cuomo has power under state securities law to proceed against the companies or their executives through civil lawsuits or criminal charges.

S&P announced earlier today what it called ``a broad set of new actions'' to strengthen its ratings. Moody's, the second- largest credit-rating company, said this week it was considering a new rating system, based on numbers.

`Meaningful'

``The actions we are taking today are meaningful and will be important measures to serve the capital markets,'' S&P President Deven Sharma said in an interview today with Bloomberg Television. ``We are taking these steps after seeking input from market participants, including investors, issuers, central bankers and regulators around the world.''

Sharma said the initiatives are making ``a fundamentally good process better.'' S&P plans to take additional steps ``as needed to best serve the capital markets,'' he said.

S&P plans 27 initiatives, including hiring an ombudsman and demanding disclosure of collateral in structured-finance securities, the company said in a statement. It also plans to reduce conflicts of interest through measures such as preventing analysts form covering issuers for more than five years.

``We certainly welcome feedback from all market participants and look forward to further constructive dialogue,'' Moody's spokesman Anthony Mirenda said, responding to Cuomo's statement.

Moody's, based in New York, has received inquiries from ``various governmental agencies,'' he said, declining to say if the company had received a subpoena from Cuomo.

Moody's has separated its credit-ratings operations from its marketing and analytics and Fitch is reassessing the way it grades certain types of debt.

``The changes proposed by S&P and Moody's fail to address the root cause of the problem, which is skewed incentives,'' Sean Egan, managing director of Egan-Jones Ratings Co., a rival credit-rating firm based in Haverford, Pennsylvania, said in a telephone interview. ``S&P and Moody's are paid by issuers which desire the highest possible ratings and, in turn, the lowest possible issuance cost.''

Egan-Jones's ratings are paid for through subscriptions instead of by the issuer.

Cuomo's probe of the ratings agencies is part of a larger investigation of the mortgage industry. He also has subpoenaed investment banks, Fannie Mae and Freddie Mac, the two biggest buyers of U.S. mortgages, due diligence firms, and other market participants.

Cuomo sued First American Corp., the largest U.S. title insurer, in November, alleging that its eAppraiseIt LLC unit inflated home values under pressure from Washington Mutual Inc.

Huxley Somerville, a spokesman for Fitch, had no immediate comment on why Cuomo did not mention the firm in today's statement. ``We are happy to answer to answer any questions they have about our business,'' Somerville said in a interview.

S&P is a unit of New York-based McGraw-Hill Cos. Fitch is owned by Paris-based Fimalac SA.

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net;

Last Updated: February 7, 2008 17:41 EST