An ex-Moody's Corp derivatives analyst said the credit-rating agency intimidated and pressured analysts to issue glowing ratings of toxic complex, structured mortgage securities.

In a 78-page letter to the Securities and Exchange Commission, William Harrington outlined how the committees that make the ratings decisions are not independent and how managers often intimidated analysts.

The management of Moody's, the management of Moody's Corporation and the board of Moody's Corporation are squarely responsible for the poor quality of previous Moody's opinions that ushered in the financial crisis, he wrote.

The track record of management influence in committees speaks for itself -- it produced hollowed-out (collateralized debt obligation) opinions that were at great odds with the private opinions of committees and which were not durable for even a short period after publication, he added.

Harrington's August 8 letter, which was sent in response to a 517-page proposal by the SEC on credit-rating regulations, raises similar issues that are already at the heart of a Justice Department probe into McGraw-Hill's Standard & Poor's.

We cannot emphasize strongly enough the importance Moody's places on the quality of our ratings and the integrity of our ratings process, said Moody's Corp spokesman Michael Adler. For that very reason, we have robust protections in place to separate the commercial and analytical aspects of our business, and our ratings are assigned by a committee -- not by any individual analyst.

The Justice Department has been looking into what S&P analysts wanted to do with ratings during the financial crisis, and what they were told to do, according to one source familiar with the matter.

A second source has said the department also has been investigating Moody's in connection with structured product ratings during the crisis, although the exact focus on that probe is unclear.

Earlier this year, a U.S. Senate panel led by Michigan Democrat Carl Levin found that Moody's and S&P helped trigger the financial crisis after the two rating agencies gave overly positive ratings to toxic mortgage-related products and then later downgraded those ratings en masse.

Last year's Dodd-Frank Wall Street overhaul law tightens regulations for raters, including improving the transparency of the methodology used and curbing potential conflicts of interest. The SEC in May issued a proposal seeking comments on many of the Dodd-Frank provisions on rating agencies.

Harrington, who said he worked as an analyst in the derivatives group from 1999 until July 2010, said he thinks that if the SEC's proposed rules had been in place in 2002, they would still not have gotten to the heart of the problems at Moody's.

Many of the proposed rules still give more license to the management of Moody's to step up its long-standing intimidation and harassment of analysts, to the detriment of opinion formation, he said.

(Additional reporting by Jeremy Pelofsky)