Security Pacific Corp. decided Wednesday to call off its $35-million purchase of Chicago-based Duff & Phelps Inc. because of restraints put on the deal by the Federal Reserve Board.
The Fed approved the Los Angeles-based bank holding company's application to buy Duff & Phelps, an investment and credit-rating firm, on the condition that Duff & Phelps no longer issue public credit ratings.
Such rating activity represented a possible conflict of interest with the bank's corporate lending, trust investment and underwriting activities, the FCC said in its Dec. 26 ruling.
It would be "particularly unwise to establish a precedent" of allowing a major lender to acquire a credit rating firm, the Fed said
A spokeswoman for Security Pacific declined to elaborate on the company's two-paragraph statement.
Security Pacific Corp. is parent of Security Pacific National Bank, the nation's ninth-largest bank.
Duff & Phelps provides investment research, financial advisory and investment management services to about 400 institutional clients in addition to its credit-rating activities.
The combination of Security Pacific and Duff & Phelps was announced in January, 1984.