September 1, 2010 -- The Securities and Exchange Commission issued a report cautioning nationally recognized credit rating agencies about deceptive ratings conduct and the importance of sufficient internal controls over the policies, procedures and methods the firms use to determine credit ratings. The report was based on an investigation into whether Moody's Investors Service, Inc. violated SEC registration and federal securities laws in its handling of a computer error. SEC decided not to pursue an enforcement action because of jurisdictional uncertainties. The Dodd-Frank Act gives federal district courts jurisdiction over SEC enforcement actions that allege violations of the antifraud provisions of the securities laws when the conduct includes significant steps, or a foreseeable substantial effect, within the United States. The report warned credit rating agencies that the commission would pursue antifraud enforcement actions against deceptive ratings conduct. More information