Rating agencies have long argued that their opinions, like any expressed by the press in America, are commentary and thus free from any regulation or censure. That argument has been weakened, if only a bit, by a settlement announced on January 21st between one of the biggest, Standard & Poor's (S&P) and the Securities and Exchange Commission (SEC), America's grandest financial regulator, along with the attorneys-general of New York and Massachusetts. s&p agreed to pay $58m to the sec and $i9m to the two states. It also said it would stop providing ratings for a year on a certain type of bond backed by commercial property. The regulators had complained that it had provided misleading information about the methodology behind its ratings to the investors who use them and had softened standards to attract more business. (The firms issuing the securities being rated, which pay for the rating agencies to assess them, naturally prefer them to be declared creditworthy.) In addition to its action against the company, the sec has also begun proceedings against a former managing director at s&p, Barbara Duka, possibly in response to pervasive complaints that financial firms are often accused by regulators of behaving badly, but their employees seldom are.
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