Sources familiar with the issue tell the Financial Times that the SEC’s enforcement division isn't after the S&P nor do they have evidence of specific trading activity that would suggest a leak.
An examination department, which oversees ratings agencies, asked for names.
Should a formal investigation evolve, a bigger issue could arise – Standard and Poor’s license.
The Credit Rating Agency Reform Act of 2006 states that an agency could have its license revoked if it leaks information prior to disclosing a move on a rating public, MarketWatch reports.
The ratings agency must also have policies and procedures to prevent such a disclosure.
“If it is true that they told hedge funds and briefed banks and told a few people ahead of everyone else that would appear to be a clear violation 2006 Act,” says Consumer Federation of America director Barbara Roper, according to MarketWatch.
“Credit rating agencies have to have polices to prevent the dissemination of pending rating action on the Internet.”
Increasing the probe from an inquiry level to an enforcement one may be tough.
“Proving someone leaked information about the downgrade, or traded ahead of it, could be challenging. Many traders anticipated the downgrade and bets could occur across numerous securities or currencies without inside information,” the Times reports.
“In a traditional insider trading case, there is often a more predictable correlation between a company’s stock price and a particular development.”
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The Senate Banking committee said it would look into S&P’s move to knock U.S. credit ratings to AA-plus from AAA, which pummeled stock markets.
Like the SEC, the Senate panel is gathering information on the move and hasn’t opened a formal investigation over any wrongdoing, Reuters reports.
Senate Banking Committee Chairman Tim Johnson has said the downgrade was an "irresponsible move" that could have a far-reaching impact, Reuters adds.
The downgrade may also "have spillover effects that tax the American people by increasing interest rates on home loans, credit cards, and car loans, and by increasing the cost of finance for some state and local governments."
S&P also has come under attack from House of Representatives Majority Leader Eric Cantor, a conservative Republican who has been outspoken in his opposition to tax increases.
In a memo to his fellow Republicans that was made public by his office, Cantor noted that S&P's analysis of the U.S. fiscal situation "is overly focused on resolving the debt crisis in a manner that would greatly worsen the jobs crisis."
He was referring to S&P's contention that "the majority of Republicans in Congress continue to resist any measure that would raise revenues" to help ease the country's fiscal problems.
During the debt limit negotiations, Cantor and fellow Republicans successfully opposed raising taxes on Americans despite Democrats' insistence for more revenue.
The House Financial Services oversight subcommittee, which held a hearing on the credit agencies last month, has no plans for another hearing, a congressional aide said this week.
Meanwhile, Columbia University law professor John Coffee said the fate of future reform efforts for the ratings agencies was uncertain.
Credit rating agencies were widely criticized for fueling the 2007-2009 financial crisis by assigning top ratings to securities that were backed by subprime mortgages, which then plummeted in value as the housing market collapsed.
The new Dodd-Frank regulatory reform law does not include a tough reform amendment offered by Democratic Senator Al Franken of Minnesota, but it did require a two-year study of the credit ratings industry, perceptions that it suffers from an inherent conflict of interest, and what to do about it.
Of particular concern is the fact that companies issuing financial instruments pay the ratings agencies to do the analysis that results in their ratings, Coffee said.
Governments don't solicit or pay credit agencies for ratings.
Meanwhile, a managing director at Standard & Poor's said that he has absolutely no second thoughts about the credit ratings agency's decision to cut the U.S. debt rating.
S&P's David Beers told BC's "Good Morning America" earlier this week that the agency's decision was based on several factors, including damage done to the U.S. reputation over the controversy surrounding the debt ceiling and concerns that underlying public finances are on an unsustainable path.
Asked if he had any second thoughts about the downgrade, Beers said "absolutely not."
While much has been made about the Treasury Department's claim that S&P acted on an analysis that had a $2 trillion error, Beers rebuffed the notion during an appearance on CNN.
"This idea that we made a $2 trillion error is simply a smoke screen for the unhappiness about our decision," he said.
Beers did seem to try to alleviate concern about the downgrade, saying it was "a very small diminution, if you like, in the credit standing of the United States."
"This is not a catastrophic decline in the U.S.'s creditworthiness," he added.