Standard & Poor’s parent company, McGraw Hill, disclosed in an 8-K on September 26, 2011 that it had received a “Wells Notice” from the Securities and Exchange Commission regarding the rating of a collateralized debt obligation in August of 2007. The CDO at issue, Delphinus CDO 2007-1, was largely based on subprime mortgage loans. The Wells Notice indicates that the SEC may initiate litigation seeking civil penalties, disgorgement of fees, and other appropriate equitable relief. SEC Filing.
Wells Notice
Moody’s Receives Wells Notice
On May 7, Moody’s filed its Form 10-Q with the SEC, disclosing that it received a “Wells Notice” from the SEC Staff stating that the Staff is considering recommending that the SEC institute administrative and cease-and-desist proceedings against Moody’s in connection with its initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization. Moody’s Form 10-Q.