Moody's Corp. fell as much as 12% Monday after saying it may be sued by the Securities and Exchange Commission for filing false and misleading descriptions of its credit rating policies.

Moody's is among the companies that face scrutiny by Congress and state insurance regulators after assigning top grades to U.S. subprime mortgage bonds just before that market collapsed in 2007. The company said Friday in a regulatory filing that the SEC notified it on March 18 that its process for assigning credit ratings may lead to a lawsuit. A finding by Moody's that a rating committee policy had been violated by an employee sparked the SEC action, according to the filing.

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