New York Attorney General Eric Schneiderman is investigating Standard & Poor’s (S&P) to determine whether it failed to follow its own methodology in rating commercial-mortgage bonds in order to win business from banks, according to two people with knowledge of the matter.
The unit of McGraw Hill Financial Inc is facing scrutiny on six such deals it graded in 2011, said the people, who asked not to be identified because the probe has not been made public.
S&P spokesman in New York Ed Sweeney declined to comment, as did Schneiderman spokesman Matt Mittenthal.
The New York Attorney General’s office is at least the third government agency investigating S&P’s business of grading commercial mortgage-backed securities (CMBS), in which banks pool loans on properties such as shopping malls, hotels and skyscrapers to create securities that are sold to investors.
S&P said in July it received a notice from the US Securities and Exchange Commission (SEC) that the regulator may seek an enforcement action related to the firm’s CMBS ratings in 2011.
Massachusetts Attorney General Martha Coakley is also looking into how the firm rated such securities, people familiar with the matter said last year.
The ratings firm is separately facing a US$5 billion lawsuit filed by the US Justice Department in February last year, alleging that S&P and its parent inflated ratings on bonds backed by home loans made to the riskiest borrowers to win business from Wall Street banks.
S&P, along with Moody’s Investors Service and Fitch Ratings, were blamed for helping trigger a financial crisis that sent the world’s largest economy into its longest recession since 1933.
After the Justice Department filed the lawsuit, S&P said it would defend itself “vigorously” against the “meritless” claims.
Four days before receiving the SEC warning on July 22, S&P cut almost a third of its CMBS group and transferred department head Peter Eastham to a role in his native Australia, according to a person with knowledge of the move.
Following the reduction, there were about 32 people in the group.
The SEC alleged violations related to the CMBS rankings and “public disclosure made by S&P regarding those ratings thereafter,” according to a July 23 regulatory filing.
The SEC may pursue actions including a cease-and-desist order, civil money penalties or a suspension or revocation of the firm’s ratings accreditation.
S&P’s market share for ranking bonds backed by commercial mortgages has declined since the rater pulled assigned grades three years ago on an offering from Goldman Sachs Group Inc and Citigroup Inc, prompting the banks to abandon the deal after it was placed with investors. S&P yanked the rankings because it was reviewing conflicts over how its methodology was being applied, the company said at the time.
The credit grader halted rating any new commercial-mortgage bonds, saying it had to review a potential discrepancy in its model.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day