Japan's Financial Services Agency ordered Standard & Poor's Ratings Japan K.K. to improve its operations after finding it had failed to account for losses on underlying assets referenced in so-called synthetic collateralized debt obligations (CDO).

The FSA said S&P also published press releases with incorrect information on ratings, including one in which it mistakenly assigned to one of the companies under its coverage the short-term rating of that company's affiliate.

Standard & Poor's Ratings Japan said in a statement it has already prepared preventive measures to strengthen its compliance.

"We take this matter very seriously and sincerely apologize to clients and market participants for the issues that led to the recommendation and order," S&P Japan said.

Synthetic CDOs are complex derivatives composed of a portfolio of credit default swaps and have been blamed for exacerbating the 2008 global financial crisis.

(Reporting by Noriyuki Hirata and Chikafumi Hodo; Writing by Nathan Layne; Editing by Michael Watson)

• A Permanent Economic Emergency