Standard & Poor’s Ratings Services (S&P Ratings), a business unit of McGraw Hill Financial, Inc. (NYSE: MHFI) has reached a settlement with the U.S. Securities and Exchange Commission (SEC) to resolve the SEC’s investigation into six U.S. conduit/fusion commercial mortgage-backed securities (CMBS) transactions rated by S&P Ratings in 2011 and two additional U.S. conduit/fusion CMBS transactions from that period, the subject of a Wells Notice received and disclosed by S&P Ratings in July 2014. S&P Ratings also reached settlements with the Attorneys General of New York and Massachusetts to resolve investigations into the same matters.
In addition, S&P Ratings reached settlements with the SEC regarding descriptions in its 2012 CMBS criteria of credit enhancement levels and analyses contained in a related article published in 2012 regarding Depression Era data, as well as the application of loss severity assumptions in its surveillance of certain U.S. RMBS transactions. S&P Ratings did not admit or deny the charges in these settlements. These settlements are final and are not subject to court approval.
Under the terms of the settlements with the SEC, S&P Ratings will pay a total of $58 million to the SEC. S&P Ratings has also agreed to take a “time-out” from issuing ratings on new U.S. conduit/fusion CMBS transactions until January 21, 2016, including engaging in any marketing activity related thereto. S&P Ratings will continue to rate all other types of CMBS transactions and provide surveillance of outstanding CMBS ratings, including U.S. conduit/fusion ratings. Under the terms of the settlements with New York and Massachusetts, S&P Ratings will pay a total of $19 million to these states.
The settlements do not affect any outstanding S&P Ratings credit ratings or the manner in which S&P Ratings conducts credit analysis under the relevant criteria.