SEC probes rating firms’ errors

The Securities and Exchange Commission is examining credit-rating companies’ mistakes in evaluating structured financial products after media reports said a computer error at Moody’s Corp. led to inflated rankings.

The SEC sent letters to Moody’s, Standard & Poor’s Corp. and Fitch Ratings Ltd. on Friday asking the companies to disclose any errors they’ve made, agency spokesman John Nester said Tuesday.

The regulator also sought information on the policies and procedures credit raters use to catch mistakes.

“The letters asked the firms to describe any errors in the ratings of structured finance products and what they did to correct those errors over the last four years,” Nester said.

The SEC review adds to probes by state authorities such as Connecticut Atty. Gen. Richard Blumenthal, who is investigating whether Moody’s tried to conceal a computer error. The Financial Times said May 21 that a glitch gave “Aaa” ratings to debt obligations that should have been graded as much as four levels lower.

Moody’s will be “vigilant” in reviewing whether top ratings were given to securities that didn’t deserve them, Chief Executive Raymond W. McDaniel said Friday.