NEW YORK ( TheStreet)--The Securities and Exchange Commission, that infamous wrist-slapper of financial crooks, has actually caused a major financial stock to be downgraded. On Friday, analysts at Bank of America Merrill Lynch downgraded Federated Investors ( FII)to "Neutral" from "Buy" because of a widely expected rule proposal from the SEC that would tighten the rules for the money market fund industry. Federated, which is one of the largest money market managers in the U.S. and has 77% of its assets under management in money market funds, according to Merrill, is highly vulnerable. "We had previously believed proposals were tolerable for Federated, but the possibility that the SEC will propose liquidity 'hold-backs' which limit the amount investors can redeem from money market funds would fundamentally alter the product in our view, potentially making it less widely used," the report states. It is hard to think of many instances when anything the SEC has done or contemplated doing has roiled a major financial stock. It is true that the SEC's civil fraud charges against Goldman Sachs ( GS) had that effect in April 2010. But it is hard to say how much of that selloff came as a direct result of the SEC's toughness and how much of it came from what the charges implied: that government officials clearly had Goldman in their sights and wanted to do something--anything--to satisfy the public's desire to make Wall Street pay for the 2008 crisis. Columbia University Securities law Professor John Coffee agrees that it is unusual for the SEC to have so direct an effect on the share price of a major company. "The SEC actions against Enron and WorldCom may have had that effect; I cannot remember precisely, but you are correct that it is rare," he wrote via email. After The Wall Street Journal reported on the proposed money market reforms on Tuesday morning, Federated shares opened more than 3.5% lower at $17.99. The shares were at $17.69 mid-Friday. The SEC has a long-standing reputation for tameness, and some of its higher-profile settlements in the wake of the crisis have drawn criticism, most notably from Jed Rakoff, a United States District Judge for the Southern District of New York.