Moody's may face SEC action over application

NEW YORK (AP) - Moody's says it may face an SEC investigation over its license application three years ago to be one of the nation's recognized credit ratings agencies.

The company did its own review of how it rated the risk in 2008 and found that it had erred in the way it rated some debt obligations. The ratings are unrelated to the mortgage backed securities for which the agency is already under fire.

Late Friday, Moody's revealed in a filing with the Securities and Exchange Commission that federal investigators called its procedures for quantifying some debt ratings "false and misleading...in light of the company's finding that a rating committee policy had been violated."

Moody's says it disagrees with the SEC's findings.

Moody's shares slumped nearly 3 percent to $22.70 in premarket trading.