SEC fines six credit rating agencies for record-keeping failures

The US Securities and Exchange Commission (SEC) has imposed a total fine of $49 million on six major credit rating agencies due to their failure to maintain proper electronic records. Among the firms, Moody's Investor Services and S&P Global Ratings received the largest penalties of $20 million each, while Fitch Ratings was fined $8 million. A.M. Best Rating Services, HR Ratings de México, and Demotech received smaller fines of $1 million, $250,000, and $100,000, respectively. The SEC's investigation revealed that employees at these agencies, including senior staff, were using personal devices and messaging apps like WhatsApp to discuss credit ratings, which violated federal recordkeeping laws. This lack of compliance can obstruct the SEC's ability to monitor adherence to regulations and protect investors. The SEC emphasized the importance of maintaining records to ensure accountability among firms. In response to the findings, Moody's, S&P Global Ratings, Fitch Ratings, and HR Ratings de México have agreed to review their electronic communication policies comprehensively. A.M. Best and Demotech, however, were recognized for their significant efforts to comply with regulations and will not be required to hire a compliance consultant. Statements from the firms indicate a commitment to improving their recordkeeping practices. Moody's expressed satisfaction in resolving the matter, while HR Ratings highlighted its strengthened policies. A.M. Best reaffirmed its dedication to regulatory responsibilities and the integrity of its ratings process.