Legacy Management Consulting Group LLC Bulletin: SEC to Pursue Ratings Fraud

Sept. 3, 2010 - PRLog -- "The SEC has issued a report cautioning credit rating agencies and the use of deceptive ratings conduct." stated Dominick Sartorio, Director of New Business at Legacy Management Consulting Group LLC. In a released statement, the SEC issued a report cautioning credit rating agencies about deceptive ratings conduct and the importance of sufficient internal controls over the policies, procedures, and methodologies the firms use to determine credit ratings.
According to the report, a European Moody's rating committee decided not to downgrade $1 billion in debt in 2007 that had artificially inflated ratings based on a flawed model with computer coding errors. Amid concerns about the negative impact on the agency's reputation, the committee voted against taking any responsive actions.

"The Dodd-Frank financial reform act now empowers the SEC with the authority to take on such wrongdoing," stated Anthony Urbano, Principal at Legacy.

The Report also notes that the Dodd-Frank Act amended the securities laws to require nationally recognized statistical rating organizations or "NRSROs" to "establish, maintain, enforce, and document an effective internal control structure governing the implementation of and adherence to policies, procedures, and methodologies for determining credit ratings."

"Investors rely upon statements that NRSROs make in their applications and reports submitted to the Commission, particularly those that describe how the NRSRO determines credit ratings," said Robert Khuzami, Director of the SEC's Division of Enforcement in a released statement. "It is crucial that NRSROs take steps to assure themselves of the accuracy of those statements and that they have in place sufficient internal controls over the procedures they use to determine credit ratings."


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U.S. Treasury Circular 230 Notice:  Any U.S. federal tax advice included in this communication is not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal tax penalties.

The information contained herein was prepared by Legacy Management Consulting Group, LLC from public documents for general informational purposes.  Its contents should not be construed as professional advice, and readers should not act upon the information contained herein without consulting a professional.  This information is presented without any representation or warranty as to its accuracy, completeness or timeliness.  Transmission or receipt of this information does not create any relationship with Legacy Management Consulting Group, LLC.  Electronic mail or other communications with Legacy Management Consulting Group, LLC cannot be guaranteed to be confidential and will not imply nor create any relationship with Legacy Management Consulting Group, LLC.

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