SEC Fines 2 Credit Rating Agencies $10 Million for Failing to Retain Work Texts

By Dean Seal

The U.S. Securities and Exchange Commission has fined two credit-rating agencies a combined $10 million for allegedly failing to preserve employees' work-related text messages.

The regulator on Friday said Morningstar subsidiary DBRS and the Kroll Bond Rating Agency have each admitted to its findings that they failed to retain text messages exchanged internally about making or adjusting credit ratings.

DBRS's violations started in at least July 2019 and included employees at senior levels, the SEC said. The texts that weren't properly preserved related to initiating and determining credit ratings, as well as adjustments to results of the predictive model that the firm used to rate certain transactions.

The Kroll firm's violations started in at least January 2020 and involved text messages about initiating, monitoring, changing and withdrawing credit ratings.

DBRS has agreed to pay $6 million and Kroll is set to pay $4 million to resolve the separate actions against them.

In a separate action, the SEC is also accusing DBRS of making systematic adjustments to its credit enhancement levels in ways that didn't line up with the company's published procedures. Without admitting or denying those findings, DBRS has agreed to resolve the matter with another $2 million penalty.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

September 29, 2023 10:18 ET (14:18 GMT)

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