Morningstar Faces Possible SEC Suit

Fri Sep 24, 2004

NEW YORK (Reuters) - U.S. securities regulators may file suit against Morningstar Inc., a provider of mutual fund and stock research, over incorrect data it published about a mutual fund, the company said on Friday.

Chicago-based Morningstar, which has filed for an initial public stock offering, said it was notified on May 24 that the U.S. Securities and Exchange Commission is considering a civil suit charging the company with violating U.S. securities laws.

Morningstar said it is fully cooperating with the SEC. It said it is in talks with the agency about the publication, of data that overstated the total return of the Rock Canyon Top Flight Fund during a nine-day period in March.

Morningstar said the incorrect data was posted to its Web site because of a misunderstanding with a fund transfer agent over historical net asset values of the mutual fund.

The company said it believes the heart of the SEC's concern relates to the timeliness in correcting the data. Morningstar said it sincerely regrets the error.

"We recognize our responsibility to investors and take our data quality very seriously," Morningstar Chairman and Chief Executive Joe Mansueto said in a letter to customers posted on the company's Web site, www.morningstar.com.

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