The Securities and Exchange Commission told Standard & Poor's Ratings Services that it could face an enforcement action for alleged securities fraud regarding six commercial real-estate deals in 2011, according to a Wednesday filing by S&P parent McGraw Hill Financial Inc., The Wall Street Journal reported yesterday. The so-called Wells Notice sent to McGraw Hill on Tuesday states that the SEC has made a preliminary determination that an enforcement action should be taken. The notice is neither a formal allegation nor a finding of wrongdoing, McGraw Hill said. The notice is yet another legal headache for S&P, which also faces a $5 billion fraud lawsuit with the federal government over mortgage-bond grades that turned out to be inaccurate. While the two sides aren't in active talks, S&P is willing to reopen discussions with the Justice Department to settle the case. If found liable in the more-recent matter, S&P could face civil monetary penalties or a cease-and-desist order, among other potential actions.
