SEC Charges Two Credit Rating Agencies, DBRS and KBRA, with Longstanding Recordkeeping Failures

The Securities and Exchange Commission today announced charges against credit rating agencies DBRS Inc. and Kroll Bond Rating Agency, LLC (KBRA) for longstanding failures to preserve electronic records, including off-channel communications on personal and work-issued devices. Additionally, the SEC charged DBRS with violating disclosure and internal control provisions of the federal securities laws in rating certain commercial mortgage-backed securities (CMBS). To settle the charges, DBRS agreed to pay $8 million in civil penalties and KBRA agreed to pay $4 million in civil penalties. “Credit rating agencies are gatekeepers in our securities markets that are subject to recordkeeping requirements—requirements that aren’t optional, but rather foundational to the Commission’s ability to maintain fair, orderly, and efficient markets,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.