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Justice Department, state officials to announce Standard & Poor's suit

February 05, 2013|By Jim Puzzanghera
  • The headquarters of Standard & Poor's in New York City.
The headquarters of Standard & Poor's in New York City. (Henny Ray Abrams / Associated…)

WASHINGTON -- Justice Department officials and attorneys general from California and several other states were set Tuesday morning to announce a landmark civil suit against Standard & Poor's Corp. concerning the company's credit ratings of troubled mortgage-backed securities before the financial crisis.

U.S. Atty. Gen. Eric H. Holder Jr., along with California Atty. Gen. Kamala Harris, and the attorneys general of Connecticut, Delaware, Mississippi, Illinois and Iowa were scheduled to hold a news conference in Washington at 8:15 a.m. PST. The attorney general of the District of Columbia also was set to appear.

The Justice Department said only that it would announce "a major financial fraud enforcement action," but department attorneys filed a suit late Monday in Los Angeles federal court against S&P and it was expected to be the subject of Tuesday's news conference.

Justice Department complaint against S&P

The suit accused the company of giving top credit ratings to troubled mortgage-backed securities that later failed, helping to trigger the financial crisis.

S&P is one of three major credit ratings companies. They're ratings of securities backed by risky subprime mortgages have been strongly criticized in the aftermath of the financial crisis.

S&P said Monday that the Justice Department had informed the company that it intended to file a civil lawsuit focused on ratings in 2007 of some collateralized debt obligations, or CDOs -- securities that pool bonds and other assets.

The company said such a suit "would be entirely without factual or legal merit."

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