US sues S&P over gold rating for subprime
Tuesday 05 February 2013
The US government is taking ratings agency Standard & Poor’s to court over the toxic subprime sludge given gold-plated ratings in the run-up to the financial crisis.
The Department for Justice today launched a civil claim against S&P and parent McGraw-Hill over its rating of mortgage bonds and is seeking a huge fine.
The move marks the first enforcement action against a credit rating agency over alleged illegal behaviour tied to the financial crisis and could trigger a wave of lawsuits from other investors.
A civil claim has a lower burden of proof, increasing the chances of a result. The lawsuit said: “Considerations regarding fees, market share, profits, and relationships with issuers improperly influenced S&P’s rating criteria and models.”
Investment banks paid S&P, as well as other agencies Moody’s and Fitch, millions of dollars for rating an alphabet soup of complex financial instruments left nearly worthless by the crash.
Talks over a $1 billion (£634 million) settlement collapsed last week, according to reports.
S&P said the lawsuit was “entirely without factual or legal merit”.
“The DoJ would be wrong in contending that S&P ratings were motivated by commercial considerations and not issued in good faith.”
- 1 Scottish referendum: So how about the English now being given a chance to split from England?
- 2 Friends 20th anniversary: Alison Jackson photographs reunited cast
- 5 Free U2 album: How the most generous giveaway in music history turned into a PR disaster
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...