SEC Says Debt-Rating Firms Sacrificed Quality for Profit

Credit-rating firms put profits ahead of quality controls as they sought to keep up with the surging growth of mortgage-related debt products in recent years, a Securities and Exchange Commission report released Tuesday showed.

SEC Chairman Christopher Cox, who announced the report's findings at a news conference, said the SEC found "serious shortcomings" in the practices of the country's three largest credit-rating firms: Moody's Corp., McGraw-Hill Cos.' Standard & Poor's unit, and Fimalac SA's Fitch Ratings.

The 10-month examination uncovered poor disclosure practices, a lack of policies and procedures guiding the analysis of mortgage-related debt, and insufficient attention paid to ...