{"id":1193,"date":"2013-02-05T12:14:38","date_gmt":"2013-02-05T12:14:38","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2013\/02\/us_justice_department_sues_sta_1"},"modified":"2022-03-10T09:15:00","modified_gmt":"2022-03-10T15:15:00","slug":"us-justice-department-sues-sta-1","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/us-justice-department-sues-sta-1\/","title":{"rendered":"US Justice Department Sues Standard and Poor’s Over Allegedly Fraudulent Ratings of Collateralized Debt Obligations"},"content":{"rendered":"

\t\t\t\tThe US Department of Justice and has filed civil fraud charges against Standard & Poor’s Ratings Service, contending that credit rating agency’s fraudulent ratings of mortgage bonds played a role in causing the economic crisis. Settlement talks with Justice Department reportedly broke down after the latter indicated that it wanted at least $1 billion. S & P was hoping to pay around $100 million. Also, there was disagreement between both sides as to whether or not the credit rater could agree to settle without having to admit to any wrongdoing.<\/p>\n

The securities case against S & P involves over 30 collateralized debt obligations, which were created in 2007 when the housing market was at its height. The government believes that between September 2004 and October 2007 the credit rater disregarded the risks that came along with the investments, giving them too high ratings in the interest of profit and gaining market share. The ratings agency allegedly wanted the large financial firms and others to select it to rate financial instruments. Meantime, S & P continued to tout its ratings as objective, misleading investors as a result. S & P would go on to make record profits, and the complex home loan bundles eventually failed.<\/p>\n

Although there have been questions for some time now about the credit ratings agencies’ role in creating a housing bubble, this is the first securities lawsuit brought by the government against one of these firms over the financial crisis. It was in 2010 that a Senate probe revealed that from 2004 to 2007 S & P and Moody’s Investors Service (MC) both applied rating models that were inaccurate, which caused them to fail to predict exactly how well the risky mortgages would do. The lawmakers believed that the credit rating agencies let competition between each other affect how well they did their jobs.<\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

The US Department of Justice and has filed civil fraud charges against Standard & Poor’s Ratings Service, contending that credit rating agency’s fraudulent ratings of mortgage bonds played a role in causing the economic crisis. Settlement talks with Justice Department reportedly broke down after the latter indicated that it wanted at least $1 billion. S […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3742,3845,3883],"tags":[],"class_list":["post-1193","post","type-post","status-publish","format-standard","hentry","category-collateralized-debt-obligation","category-credit-rating-agencies","category-standard-and-poors"],"yoast_head":"\nUS Justice Department Sues Standard and Poor's Over Allegedly Fraudulent Ratings of Collateralized Debt Obligations — Investor Lawyers Blog — February 5, 2013<\/title>\n<meta name=\"description\" content=\"The US Department of Justice and has filed civil fraud charges against Standard & Poor's Ratings Service, contending that credit rating agency's — February 5, 2013\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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