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Who would have guessed that Moody's would do something shady?



May 10, 2010 – Comments (8) | RELATED TICKERS: MCO

I have been blasting Moody's (MCO) and Standard & Poors (MHP) for a while now, complaining that they were as responsible as anyone for the financial meltdown yet they have somehow have been able to retain their government-mandated oligopoly status.  My MCO short is one of the few CAPS trades that I refuse to close no matter what, as a matter of principle.

It appears as though the ratings agencies may finally be getting theirs.  Moody's recently disclosed in its 10Q (late Friday of course) that the SEC has given it a "Wells Notice," which essentially means that it is getting ready to file a formal complaint against the company.

As I said, Moody's just notified shareholders that it is being investigated by the SEC.  Guess when it found out about the investigation...March 18th.  Ahhhhh, shouldn't Moody's have notified shareholders about this investigation earlier than nearly two months after the fact?  

You know who did know about the investigation, Moody's CEO Raymond McDaniel. Interestingly, he just happened to sell one hundred thousand shares of MCO stock at $29 and good old Uncle Warren Buffett unloaded nearly a million shares of the company immediately following Moody's receipt of the Well's Notice. Coincidence?  Perhaps, but still it sure looks bad.

I hope that Moody's gets hammered.

Moody’s Stock Still Pressured by S.E.C. Inquiry Disclosure


Short MCO in CAPS, but not in real life (though not for lack of trying) 

8 Comments – Post Your Own

#1) On May 10, 2010 at 4:15 PM, kdakota630 (29.04) wrote:

Interesting.  Excellent blog, Deej.

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#2) On May 10, 2010 at 9:20 PM, ChrisGraley (28.58) wrote:

In Raymond McDaniel's defense, he just exercised his options. buffet on the other hand started selling the day Moody's was notified.

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#3) On May 10, 2010 at 10:11 PM, vriguy (71.97) wrote:

Now let us see if the SEC has the guts to investigate Saint Warren himself for insider trading.

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#4) On May 10, 2010 at 10:16 PM, RLAprof (< 20) wrote:

They should all be sharing a suite with Madoff.

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#5) On May 10, 2010 at 10:28 PM, goalie37 (86.18) wrote:

I'm shocked, shocked to find that gambling is going on in here

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#6) On May 11, 2010 at 12:33 AM, Monopolygames (< 20) wrote:

The SEC is already chasing Mr. Buffett....about his railway deal

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#7) On May 11, 2010 at 4:28 AM, ralphmachio (< 20) wrote:

Just a question of time before Buffet gets caught with hand in cookie jar.

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#8) On May 11, 2010 at 9:32 AM, outoffocus (24.08) wrote:

I said it before and I'll say it again.  Its all show. How can the SEC investigate Moody's for fraudulent ratings when the biggest fraudulent rating in history is the US Gov's AAA rating? Huge conflict of interest and I don't see anything coming of this investigation.

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