SEC Says Dodd-Frank Law Lets Agency Chase Overseas Ratings Fraud
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The U.S. Securities and Exchange Commission said it plans to use new financial laws to pursue credit-rating fraud initiated overseas after dropping a case against Moody’s Corp. amid uncertainty over its authority.
The SEC’s investigation found that a Moody’s ratings committee based in Europe refused to lower inflated grades on almost $1 billion of debt in 2007, the agency said in a report released yesterday. The committee declined to correct errors produced by a flawed ratings model out of concern for the firm’s reputation, the SEC report said.