Federal regulators are warning credit rating agencies that they could face civil fraud charges for giving inaccurate ratings to investments.
The Securities and Exchange Commission issued the warning Tuesday in a report on its investigation into a possible violation of the law by Moody's Investors Service, one of the three big rating agencies. The SEC said it will not pursue Moody's for civil fraud because of uncertainty over jurisdiction.
The financial overhaul law enacted in July calls for reducing the influence of Moody's, Standard & Poor's and Fitch Ratings. They were discredited in the financial crisis for giving high ratings to risky mortgage securities.
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