SEC’s WhatsApp probe expands as ratings agencies hit with fines

Moody’s Corp., S&P Global Inc. and Fitch Ratings Inc. will pay $48 million over allegations that credit rating companies failed to properly preserve electronic communications — the latest fallout from U.S. regulators’ so-called WhatsApp investigations.

The Securities and Exchange Commission said Tuesday that Moody’s and S&P will each pay $20 million to settle the cases, while Fitch will pay $8 million. The firms admitted they violated the agency’s record-keeping rules and will retain a compliance consultant, the SEC said in a statement.

The fines add to the billions of dollars the big banks have previously agreed to pay the Wall Street regulator to settle similar investigations into the use of messaging on personal phones and WhatsApp. Financial firms are required to monitor and save communications involving their business to prevent potential misconduct.

“We have seen time and time again that failure to maintain and preserve required records can impede staff’s ability to ensure that firms comply with their obligations and the commission’s ability to hold defaulters accountable, often to the detriment of investors.” said Sanjay Wadhwa, deputy director of the SEC’s enforcement unit.

In a statement, Moody’s said it was “fully committed” to complying with its record-keeping obligations and was pleased to put the matter behind it.

“S&P Global Ratings remains committed to complying with its regulatory obligations,” the company said in a statement. It noted that the regulator acknowledged the company’s remedial actions and cooperation.

Fitch did not immediately respond to emailed requests for comment.

The agency also settled with HR Ratings de México for $250,000, AM Best Rating Services Inc. for $1 million and Demotech Inc. for $100,000.

“HR Ratings has significantly strengthened its electronic recordkeeping policies and procedures,” the company said in a statement. “The settlement with the SEC underscores our firm commitment to maintaining regulatory standards in every jurisdiction in which we operate.”

AM Best said he was pleased that the SEC recognized the firm’s “historical efforts to comply with recordkeeping requirements,” that the agency had decided that a compliance consultant was not necessary and that the matter was resolved. A representative for Demotech did not immediately respond to a request for comment.

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