SEC To Look At S&P Downgrade Of U.S. Debt


WASHINGTON, Aug. 13 (UPI) — Regulators will examine the straw that broke the Wall Street camel’s back, S&P’s downgrade of U.S. debt from AAA to AA+, sources told The Wall Street Journal.

The U.S. Treasury Department has said the downgrade by credit rating agency Standard & Poor’s is the result of a $2 trillion mathematical error. S&P, however, says it began the calculations that led to the downgrade with different assumptions, the Journal reported Saturday.

S&P’s announcement of the downgrade after markets closed Aug. 5 sent markets on a roller coaster ride, with the Dow Jones industrial average logging four consecutive swings of at least 400 points, the first time ever for the index.

The downgrade came after months of negative economic data and a prolonged debate in Washington over raising the debt ceiling that escalated tension on Wall Street.

Sources told the Journal the Securities and Exchange Commission is looking into the downgrade.

Part of the investigation is likely to include how air-tight the news of the downgrade was kept before it was officially announced.

S&P President Deven Sharma said he was not aware the agency’s analysts were working on a downgrade when rumors began to circulate about a pending S&P credit rating shift.

“Maybe outsiders were leaking it. But it’s hard to say,” Sharma said.

If the news was being shared before the official announcement, it is possible savvy investors could have made money or saved money through investment decisions that would be considered profiting on confidential information, the essence of insider trading.

UPI - United Press International, Inc.

Since 1907, United Press International (UPI) has been a leading provider of critical information to media outlets, businesses, governments and researchers worldwide.

Join the Discussion

Comment Policy: We encourage an open discussion with a wide range of viewpoints, even extreme ones, but we will not tolerate racism, profanity or slanderous comments toward the author(s) or comment participants. Make your case passionately, but civilly. Please don't stoop to name calling. We use filters for spam protection. If your comment does not appear, it is likely because it violates the above policy or contains links or language typical of spam. We reserve the right to remove comments at our discretion.