The Securities and Exchange Commission (SEC) has filed a civil action against Morningstar Credit Ratings (MCR) alleging the former credit ratings agency violated disclosure and internal controls provisions of the federal securities laws in rating commercial mortgage-backed securities (CMBS).
The details: According to the SEC’s complaint, filed Tuesday in federal district court in the Southern District of New York, MCR violated disclosure requirements when it rated $30 billion in 30 CMBS transactions, from at least 2015 to 2016. Specifically, MCR failed to disclose the CMBS rating methodology it used “permitted analysts to make undisclosed adjustments to key stresses in the model that it used in determining the rating for that transaction,” the SEC said.
