In new staff reports issued Monday, the U.S. Securities and Exchange Commission praised credit rating agencies for boosting their standards since coming under the SEC’s scrutiny following the financial crisis.
The failure of the largest credit rating agencies, such as Standard & Poor’s and Moody’s Investors Service, to warn investors about the increasingly ill health of mortgage-backed bonds has often been cited as a major factor leading to the meltdown.
But since the agencies were made subject to SEC exams in 2010 by the Dodd-Frank Act, they have made notable improvements in cleaning up their acts.
In their efforts to strengthen their compliance culture, some agencies have tied employee performance to it, the SEC said. Employees saw their performance and compensation tied to the way they adhered to rating policies and procedures, codes of conduct and compliance rules.
Additionally, some organizations have increased their risk-management controls, the SEC said.