Jacob Frenkel (former SEC enforcement attorney, Shulman Rogers Gandal Pordy & Ecker PA) was interviewed by SecuritiesLaw360 in response to the U.S. Securities and Exchange Commission’s one-year suspension of Standard & Poor from rating certain mortgage-backed securities as part of a $77 million settlement over alleged fraudulent misconduct in past ratings.
Jacob S. Frenkel: “Particularly interesting is the enforcement director’s comment highlighting the fundamental conflict that is ever-present in the issuer-pay model of ratings as compared to the user-pay model. The undertakings to which S&P agreed and narrowly crafted suspension balanced the SEC’s mission-based deterrent message and responsibility to ensure that one of the few players in the ratings market continues to operate uninterrupted. The orders also reemphasize the importance of effective internal controls across all market sectors and the need to ensure integrity and consistency in corporate disclosures.”
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