Critics of the three biggest ratings agencies - Standard & Poor's, Moody's Investors Service and Fitch Ratings - say they failed to give investors adequate warning of the risk posed by mortgage securities.

The agencies were also vulnerable to conflicts of interest because they are paid by the companies whose bonds they rate, critics charge.

Similar questions have arisen about the role played by ratings of asset-backed commercial paper, or short-term corporate loans, provided by DBRS, the only agency in Canada to rate that type of debt.

Although ABCP was considered safe, a number of non-bank issuers were unable to roll over billions of dollars of the notes as questions arose about whether some of the commercial paper was backed by U.S. subprime mortgages.

"The SEC is reviewing the role of ratings agencies in general in this market," said Mary Keogh, DBRS's managing director for policy and regulatory affairs, based in Toronto. "We have not been contacted for a particular discussion in this area.

"Note that the SEC is also reviewing the applications of the current NRSROs (nationally recognized statistical rating organizations) for registration under the new NRSRO rules, as it planned."

A Moody's spokesman said the company will "fully assist" regulators in their examinations. A Fitch spokesman said in an e-mail that the company is co-operating with inquiries from regulators, including a subpoena from New York Attorney General Andrew Cuomo.

S&P, which also received a Cuomo subpoena, is "looking forward to discussing the role of ratings agencies and how we contribute to a healthy capital market," spokesman Chris Atkins said.

SEC spokesman John Nester said the review will include whether rating agencies give advice to issuers of mortgage debt and mortgage originators, any conflicts of interest and the meanings of ratings.

The credit-rating agencies, whose ratings are used by investors to gauge the riskiness or safety of mortgage-backed bonds and other forms of debt, have been subject to SEC supervision since last year.

In testimony before Congress, op-ed columns in newspapers and elsewhere, the agencies defend their track record of analyzing the mortgage market in recent years and say they have adequate protections against conflicts of interest.

In written testimony submitted Wednesday to a House of Representatives committee for a hearing on the housing market's woes, Erik Sirri, the SEC's director of market regulation, said the commission is studying whether to require disclosure of other types of performance statistics for bonds rated by the agencies - apart from historical data on default rates and downgrades.

In recent weeks, House and Senate lawmakers have said they plan to examine what role the three main credit-rating agencies played in the housing market downturn.

The agencies are also under scrutiny in Europe, where investors who got slammed by unexpected defaults in securities backed by U.S. home loans, are particularly upset. European securities regulators say they plan their own examination of the credit-rating agencies.

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