U.S. market regulator SEC is examining Standard & Poor’s last minute decision to pull its ratings on $1.50-billion deal backed by commercial real estate loans, a media report said.
“The Securities and Exchange Commission is examining Standard & Poor’s Ratings Services’ 11th-hour decision to pull its ratings on a high-profile deal backed by commercial real estate loan,” The Wall Street Journal reported, citing a source.
The SEC’s inquiry is part of its annual review of S&P and other credit rating firms, although in the S&P’s case, the regulator is examining whether the rating agency used more lenient standards to rate new CMBS deals than on other outstanding deals, the daily said.
S&P hasn’t been accused of any wrong-doing, it added.
The scrutiny relates to S&P’s decision in July, 2011, to pull its ratings on a new $1.50 billion CMBS (commercial mortgage-backed security) issued by Goldman Sachs Group and Citigroup. “The unusual step sent the commercial mortgage securities market into turmoil and scuttled the deal for weeks, angering investors and issuers,” the daily said. According to the publication, the SEC declined to comment on the issue, while S&P spokesperson said, “like all rating agencies, is subject to annual examinations by the SEC,” and “fully co-operates with such oversight”.