It’s SEC vs. S&P

Wall Street regulators fired a warning shot at Standard & Poor’s, making it the first major credit-ratings firm to come under assault for its role in the run-up to the financial crisis.

S&P — long criticized for lavishing its gold-plated stamp of approval on billions of toxic mortgage securities that led to the housing bubble — said yesterday that the Securities and Exchange Commission was mulling legal action against the firm.

McGraw-Hill, the parent company of S&P, disclosed in a regulatory filing that it had received a so-called Wells Notice from the SEC over its rating of a complex mortgage bond deal dating to 2007.

The notice means the SEC’s staff is considering recommending that the agency act after scrutinizing S&P’s actions for months. The SEC notified S&P on Thursday about the impending charges, allowing the company time to explain why it shouldn’t be sued for securities violations.

Last month, S&P infuriated the White House and Congress by downgrading US government debt a full notch from its highest triple-AAA ratings amid a stalemate in Washington over federal spending.

It’s the first formal enforcement against one of the three big credit rating agencies, which have been blasted for approving sub-prime junk mortgages that collapsed, wiping out trillions for investors, pension funds, banks and homeowners.

Moody’s Investor Service and Fitch Ratings, which also rated the same junk paper, haven’t received similar SEC notices.

Specifically, S&P said regulators are focused on a group of junk mortgages packaged as a collateralized debt obligation and dubbed “Delphinus CDO 2007-1,” whose original face value of $1.6 billon has evaporated.

S&P warned it might have to pay civil penalties in the case.

Shares of S&P parent McGraw-Hill rose 27 cents to $43.20.