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Judge narrows SEC lawsuit against Morningstar over mortgage securities ratings -Breaking

by Mike Robinson

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© Reuters.

NEW YORK, (Reuters) – A U.S. court on Wednesday denied dismissal of a Securities and Exchange Commission lawsuit against Morningstar Credit Ratings LLC alleging violations of federal securities laws. The suit was brought by Morningstar Credit Ratings LLC regarding its rating of commercial mortgage-backed securities.

U.S. District Judge Ronnie Abrams of Manhattan stated that the SEC had alleged Morningstar did not provide an adequate description of credit rating methodologies and that it failed to have effective internal controls.

However, the judge found that Morningstar did not plausibly claim Morningstar was unable to name the methodology for determining individual ratings. He dismissed the agency’s original claim.

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