Large insider transactions indicate all was not well at Moody’s
Moody’s finally fesses up to the fact that they received a Well’s notice from the SEC; this time around things could be different as Moody’s might officially be put out of business. It could actually lose the right to be a rating agency, which in our opinion would be a magnificent move.
Moody's Corp has disclosed that its credit rating unit could face enforcement action from the US Securities and Exchange Commission for allegedly misleading regulators in a 2007 application to remain a nationally recognized rating agency. Moody's said in a filing late on Friday that the SEC is mulling starting an administrative case and "cease-and-desist" proceedings, and that a so-called "Wells Notice" was received from the SEC on March 18.
Regulators send Wells Notices to firms or people to alert them of the likelihood that the government will file an enforcement action against them. Companies or people being investigated have the right to argue why they should not be charged by filing a "Wells submission." According to Moody's filing, the SEC claims the Moody's description of its procedures for determining credit ratings was "false and misleading" because of Moody's own finding that a policy had been violated internally.
In the filing, Moody's said it disagrees with the SEC and said it had sent a response explaining why its application was accurate and why it believes enforcement is uncalled for. Full Story
Off course Moody’s is going to disagree with the SEC’s finding; those that make a living by sucking blood from others try to deny it until the very end. This same punishment should be levied against all the rating agencies that failed to do their job; rating agencies that mislead should be banned forever so that the message is clear, do your job or die. Of more importance though, is the fact that insiders appeared to have acted on this information in a manner that would enable them to get the best price before this knowledge became public.
Consider the following info
Moody’s CEO Dumped 100,000 shares of stock the day the Well’s notice arrived. The well notice arrived on 18th of March; this once again clearly illustrates how corporate America is all about making money at the expense of its shareholders. However, sales by Buffets Company make CEO Raymond McDaniel…
