Moody's Receives Wells Notice, SEC To Commence "Cease & Desist" Proceedings Against Rating Agency

Tyler Durden's picture

And now for today's bombshell - lietarlly at the very end of Moody's 10-Q filed last night, we find this stunner:

On March 18, 2010, MIS received a “Wells Notice” from the Staff of the SEC stating that the Staff is considering recommending that the Commission institute administrative and cease-and-desist proceedings against MIS in connection with MIS’s initial June 2007 application on SEC Form NRSRO to register as a nationally recognized statistical rating organization under the Credit Rating Agency Reform Act of 2006.

Well at least it took Moody's under two months to report this massively material development, which while we are not positive on how to read the C&D action on the NRSRO registration, could mark the beginning of the end for the rating agency. If the firm is enjoined from providing additional rating research should the SEC action find fault and proceed with a lawsuit, it would mean game over for the business. Egan-Jones: it's IPO time.

We will be shocked, shocked we tell you, to find that Mr. Buffett has sold out his entire position in MCO when BRK's next 13-F is filed.

h/t Jing


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w a l k - a w a y's picture

Another crack in the dam, it seems.

Cistercian's picture

 Or cracking down on the damned.

bc0203's picture

Naw, the damned will just keep doing crack.  We've still got two rating agencies to bribe!

Problem Is's picture

Uncle Warren can put a stop to crack with some home spun transparency...

Would you really want to view that decrepit, wrinkled ol' crack. It would make the entire industry put down the pipe and go to rehab...

Worked for Amy W... isn't she still in leaky tit job rehab?

Translational Lift's picture

Any chance of Moody's downgrading itself in a timely manner??

BlackBeard's picture

Beautiful.  I'm short Moody's.

MsCreant's picture

Not entirely right. We are not still in love with them.

How bout this:

Gold Dust Woman, Fleetwood Mac:

Rock on, gold dust woman
Take your silver spoon
And dig your grave

Heartless challenge
Pick your path and I'll pray

Wake up in the morning
See your sunrise, loves, to go down
Lousy lovers, pick their prey
But they never cry out loud

Did she make you cry
Make you break down
Shatter your illusions of love
Is it over now, do you know how
Pick up the pieces and go home.

Rock on, ancient woman
Follow those who pale
In your shadow

Rulers make bad lovers
You better put your kingdom up for sale

Did she make you cry
Make you break down
Shatter your illusions of love
Is it over now, do you know how
Pickup the pieces and go home.

Oh regional Indian's picture


that was what I considered music before I gave up on wordy 3-5 minute songs completely.

Them and CSN.


MsCreant's picture

Ah, but what of Young? Does he not make your grade?

Oh regional Indian's picture

Nope MsC, there is something about the three part harmony that a fourth cannot fit into.

Trines and octaves, betwixt them lie all laws of creation and harmony.

Add a fourth or a ninth and its harm-only!


Pure Evil's picture

That was the Moody Blues? What happened to them between then and toward the later stages of their career?

Grandma: they looked like such nice boys.

From clean cut to sex, drugs, and rock & roll!

Fish Gone Bad's picture

I am thinking this is more than "a teachable moment" thing.  I am thinking uncle Warren knew about this and dumped his holdings.

mikla's picture


Warren totally had the inside track on this.  A shame he's not worthy of his hero status, but that's been known for some time.

This means one of the following:

  1. Consolidation of the cartel, we need a scapegoat.  Sorry Moody's, nothing personal.
  2. The ratings cartel is about to go super-nova (the markets are broken, nobody trusts, and only morons had faith in the ratings anyway).

I don't see a third option...

Pure Evil's picture

What you takin' bout Willis?

MoFo is still a hero!

Likes to make money the old fashioned way, and that is, 'anyway he can'.

You don't get rich dreaming about sunshine, lollipops, and rainbows.

It takes scheming, conniving, luck, and a little insider information.

mikla's picture

Such a shame it's a crapshoot without insider info.

anony's picture

Wall Street Motto:

"Profit is other people's ignorance".

whacked's picture

Pity that Buffett doesn't come under more scrutiny in his dealings.

Catullus's picture

Bullish. Can't downgrade debt if there's no rating agency.

SteveNYC's picture

LOL!! Or:


"Cease and Desist" from downgrading shit European debt and junk bonds. Fall in line with "hope" strategy.

MsCreant's picture

Oh Fuck! I suspect you have something there.

cougar_w's picture

That was my first thought.

The system is doomed when there is this much cynicism on the streets. The real economy goes Greek (underground and off the books) when there is this much cynicism on the streets.

Cheeky Bastard's picture

Dear Catullus

We have an open post seeking our new Chief Economist. Give us a call

Sincerely yours

Federal Reserve Bank Chairman

Ben Shalom Bernanke


faustian bargain's picture

My first thought too.

I wouldn't put it past the SEC to be gunning for taking over the duties of the rating agencies. We'll probably see some arguments surfacing soon, that private industry has no right to give credit ratings.

MsCreant's picture

Would that also expand their power to watch porn? Taking bribes can pay for some serious porn subscription action.


I know the porn jokes are getting old, but hey...they heaped this on themselves.

faustian bargain's picture

That's basically what getting and keeping power is all about: unlimited porn.

Mitchman's picture

Interesting.  they should have filed an 8-K when they got the notice as this is a material development.  More interesting is the question of what the notice is about.  It looks like not everyone at the SEC has been surfing porn LOL.

philgramm's picture

Now the SEC can hire GS to rate all the sovereign debt.  Let's face it GS is as objective as Moody's.

BabyShoes's picture

Moody's came up a little short on last months payment to the SEC.

Cheeky Bastard's picture

Morrie: Henry, you're a good kid, I've been good to you, you've been good to me. But there's something really unreasonable going on here. Jimmy's being an unconsionable ball-breaker. I never agreed to 3 points on top of the vig! Am I something special? Some sort of schmuck on wheels? 
Henry Hill: Morrie, please! You borrowed Jimmy's money, pay him. 
Morrie: I never agreed to 3 points on top of the vig! What am I, fuckin nuts? Come on! 
Henry Hill: Are you gonna argue with Jimmy Conway? Just give him his money so we can get the fuck outta here! 
Morrie: Hey! Fuck 'em! Fuck 'em in the ear! What are you talking about? Fuck 'em in the other ear, that son of a bitch! Did I ever bust his balls? Did I? Did I? I could've jumped the dime a million times, and I wouldn't have to pay tip! 
Henry Hill: Come on, Morrie, you're talking crazy, stop it! 
Jimmy Conway: [Grabs telephone cord and chokes Morrie with it, then his wig falls off and Henry starts laughing] You got money for that fuckin commercial. Fuckin' commercial, you don't got my money, you don't got my fuckin money, huh? 

Simon Jester's picture

Alas, I long for the bye gone days of good 'ol fashioned racketeering....It was loaded with humor.

I really wish Benji wore a toupée...

Schwantz's picture

It's now clear to anyone with a brain that Uncle Warren is one of the banksters.

Ned Zeppelin's picture

That has been clear for a while. Mr. Ethics, Mr. "anti-Wall Street," Mr. Middle America.  Pathetic pile of merde.

b_thunder's picture

"Paging Dr. Buffett.... paging Dr. Buffettt.... Patient is critical... Need some positive comments in the media ASAP"


Hephasteus's picture

He's busy killing and poisoning kids in the 3rd world with Mr. Gates.

Careless Whisper's picture

Actually they're "just" making them sterile with their vaccines. But they know what's best for the world.

Nihilarian's picture

Lovely Put volume for May and June.

Glenjo's picture

Ah, such a shame.  Hard to tell if they're being punished for years of shitty puffed up ratings or the current occasional truthful rating.  Couldn't happen to a nicer bunch of people with a moral compass that always points at the easy money.

FischerBlack's picture


Moody's Corporation:

Committed to excellence since March 18, 2010.