Morningstar Inc. is nearing a deal with federal regulators over allegations the firm violated rules in its bond-rating business that prohibit analysts who hand out credit ratings from being involved in sales and marketing for their companies, the Wall Street Journal reported. The potential settlement with the Securities and Exchange Commission is an embarrassment for a firm that made its name analyzing mutual funds. Morningstar has made a big push into bond ratings, saying that it would improve quality and restore investor trust in the business, whose reputation was damaged in the financial crisis. Terms of the settlement, which could be announced as early as this week, weren’t known. The settlement involves Morningstar’s ratings on asset-backed securities, and the firm could be fined several million dollars. Asset-backed securities are bonds backed by monthly payments on auto loans, student loans, credit cards and the like.
