Risk & Compliance

Spitzer Slapped Moody’s with Subpoenas

The New York Attorney General has been looking into the rating agency's assessment of reinsurers and securities backed by jumbo mortgages.
Stephen TaubAugust 1, 2005

Moody’s Corp. has received two subpoenas from New York State Attorney General Eliot Spitzer seeking documents and information concerning activities going back as far as 1997, including its rating of reinsurance companies, according to the company.

The credit-rating giant said in a 10-Q filed Friday that on May 11 it received a subpoena from Spitzer’s office seeking information about Moody’s-rated securities offerings backed by jumbo mortgages from prime borrowers. The regulator also wanted information related to credit-enhancement evaluations conducted between June 30, 2000 and June 30, 2003.

The May subpoena also seeks documents and other information regarding Moody’s credit policies and procedures since January 1, 1999.

Moody’s also reported that on July 13 it received a separate Spitzer subpoena seeking documents and other information about its ratings of the financial strength and subordinated debt of reinsurance companies. The inquiry also includes ratings that were unsolicited or in which the issuer did not participate in the rating process, dating back to January 1, 1997.

Moody’s stated that it’s responding to the requests and that it intends to continue cooperating with the Spitzer probe.

Fran Laserson, a Moody’s spokesperson, told Reuters, “We think the timing of the disclosure is appropriate.” The wire service noted that Moody’s seems to be the only one of the five major credit-rating agencies to have received subpoenas from Spitzer. Companies are not required to report the receipt of regulatory subpoenas.

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