Moody’s Corp.’s (MCO) stock continued to plunge Thursday in the wake of allegations that the credit ratings agency may have covered up knowledge of a computer glitch that caused billions of dollars of securities to receive higher-than-warranted ratings.

The charges have further rocked a company --and an industry -- attempting to recover from charges that conflicts of interest paved the way for Moody’s and other ratings companies to give their highest ratings to dodgy mortgage-backed securities that later collapsed in value.

Moody’s, the second largest credit rating company behind Standard & Poor’s, has seen its stock fall nearly 25% since the Financial Times reported Wednesday  Moody’s mistakenly gave 'AAA' ratings to sophisticated European debt products called constant-proportion debt obligation.

The allegations became more pointed when Connecticut Attorney General Richard Blumenthal said his office is investigating whether Moody’s failed to properly disclose the mistake.

U.S. Sen. Charles Schumer, D-N.Y., has called for an SEC investigation.

BNP Paribas strategist Andrea Cicione told Reuters that the allegations are a “serious hit” to the credit company.

But another analyst, Benchmark’s Edward Atorino, suggested the matter is being blown out of proportion and questioned the source of the FT’s charges.

"While we're not diminishing the seriousness of the allegations, we believe concerns about the implications of the computer error may be overblown. Moreover, the allegations may stem from a former Moody's employee, raising questions about the objectivity of the charges,” Atorino wrote in a note to investors.

Moody’s has issued a statement saying it has hired law firm Sullivan & Cromwell to assist in a “thorough external review” of its ratings process for the securities now under scrutiny.

“The integrity of our ratings and rating methodologies is extremely important to us, and we take seriously the questions raised about European CPDOs. We are therefore conducting a thorough review of this matter,” the company said.

The FT reported Moody’s apparently knew of the mistakes in early 2007 and corrected the mechanism by which the complex securities were graded.

But 'AAA' ratings already issued to CPDOs  remained in place until January when global credit markets seized up and many billions of dollars of debt securities were downgraded.

Moody’s has said it rated about $4 billion of CPDOs.