The PJ Tatler

SEC to S&P: Nice Ratings Agency Ya Got There...

The SEC, last seen up to its neck in a porn scandal, is investigating S&P over the US credit downgrade. Is this the mother of all conflicts of interest?

The U.S. Securities and Exchange Commission (SEC) has asked rating agency Standard & Poor’s (S&P) to disclose which employees knew of its decision to downgrade U.S. debt before it was announced last week, the Financial Times said, citing people familiar with the matter.

SEC’s move is part of a preliminary examination into potential insider trading, the FT said.

The inquiry was made by the SEC’s examination staff, which has oversight of credit rating firms, one person familiar with the matter told the newspaper.

However, the securities regulator is not aware of a leak from an S&P insider, nor was it aware of an aberrational trade, the paper said.

That last sentence is…telling. And a little chilling.