The Securities and Exchange Commission late Monday charged S&P Global Ratings with violating conflict of interest rules designed to prevent sales and marketing considerations from influencing credit ratings.
S&P agreed to pay a $2.5 million penalty to settle the charges.
The SEC's order finds that an issuer engaged S&P, a nationally recognized statistical rating organization (NRSRO) registered with the commission, to rate a jumbo residential mortgage backed security transaction in July 2017.
At that time, according to the SEC order, "S&P had not rated a prime 'jumbo' RMBS transaction in over two years and had not rated any transaction for this issuer since early 2015. S&P commercial employees viewed the engagement as a very positive development for S&P and its RMBS rating business."
According to the order, "over a five-day period in August 2017, S&P commercial employees — employees responsible for managing the relationship with the issuer — on several occasions attempted to pressure the S&P analytical employees — employees responsible for evaluating and assigning the rating — to rate the transaction consistent with preliminary feedback the analytical employees had given the customer that turned out to include a calculation error," the SEC said.
Despite sending the communications through the compliance department as required by S&P's policies and procedures at that time, the SEC continued, "some emails sent by the S&P commercial employees to the S&P analytical team contained statements reflecting sales and marketing considerations."
