The credit rating company Standards & Poor’s may soon face securities fraud charges related to its rating of six mortgage-backed securities in 2011, S&P said recently.
S&P received what is known as a “Wells notice” from the Securities and Exchange Commission’s. This notifies the company that the SEC’s enforcement staff is recommending the commission pursue civil securities fraud charges.
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The Wells notice comes after S&P withdrew its initial ratings of the securities when inconsistencies during the ratings process were revealed. S&P later said its review found that the system it used to rate the securities produced a final rating that was consistent with the company’s standards.
Ratings companies like S&P are relied upon by investors to issue an objective rating of the risk and outlook of certain investments. However, the credibility of these companies took a hit during the financial crisis when securities it rated “AAA” proved toxic.
If you’re an Orlando, Florida resident and want to speak to our securities fraud attorneys, please contact Colling Gilbert Wright & Carter today for a free consultation.