(Bloomberg) — It was considered one of the root causes of the global financial crisis, and regulators have spent over a decade trying to stamp the practice out. Yet Kroll Bond Rating Agency Inc.’s $2 million fine this week shows how in the securitized-debt market, the battle against ratings shopping was never truly won.
Kroll settled with the U.S. Securities and Exchange Commission over its failure to adhere to credit-rating standards for commercial-mortgage bonds and collateralized loan obligations, just months after rival Morningstar Credit Ratings LLC was hit with an even larger penalty by the regulator.
The recent fines are fueling concerns that rosy credit grades are masking deeper structural problems with the securities. The risks are particularly acute in the CMBS market, where shutdowns stemming from the coronavirus pandemic have battered revenues for malls, hotels and