NEW YORK (Reuters) – A U.S. judge on Wednesday narrowed but refused to dismiss a Securities and Exchange Commission lawsuit accusing Morningstar Credit Ratings LLC of violating federal securities laws in its ratings of commercial mortgage-backed securities.
U.S. District Judge Ronnie Abrams in Manhattan said the SEC plausibly alleged that Morningstar failed to provide a general description of its credit rating methodology, and lacked effective internal controls over its ratings process.
But the judge said the SEC failed to plausibly allege that Morningstar failed to identify the methodology used to determine individual ratings, and dismissed the agency’s underlying claim.
(Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)
