Moody's Corp. has agreed to pay nearly $864 million to settle federal and state claims it gave inflated ratings to risky mortgage investments in the years leading up to the financial crisis. Moody's acknowledged that it used a more lenient standard for certain financial products and didn't make public the differences from its published standards. “Moody's failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession,” Principal Deputy Associate Atty. Under the settlement, Moody's agreed to a number of reforms designed to make sure its credit ratings are objective, including separating commercial and credit rating functions; ensure changes to its rating methods are independently reviewed; and ensuring that some employees aren't compensated based on Moody's own financial performance. “The agreement acknowledges the considerable measures Moody's has put in place to strengthen and promote the integrity, independence and quality of its credit ratings,” Moody's said in a statement.

Source: Los Angeles Times January 14, 2017 01:55 UTC