Judge narrows SEC lawsuit against Morningstar over mortgage securities ratings

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U.S. District Judge Ronnie Abrams in Manhattan said the SEC plausibly alleged that Morningstar failed to provide a general description of its credit rating methodology, and lacked effective internal controls over its ratings process.

But the judge said the SEC failed to plausibly allege that Morningstar failed to identify the methodology used to determine individual ratings, and dismissed the agency’s underlying claim.