S&P to pay nearly $1.4B to resolve allegations it inflated ratings of mortgage securities
Standard & Poor’s has agreed to pay $1.375 billion to resolve allegations that it inflated ratings of mortgage securities before the 2008 financial crisis.
The agreement settles allegations by the U.S. Justice Department, 19 states and Washington, D.C., report the New York Times Dealbook blog, the National Law Journal (sub. req.) and a press release.
The Justice Department alleged S&P had a conflict of interest when it rated securities created by banks that paid for the S&P ratings. Suits claimed S&P falsely maintained its ratings were objective and independent, causing losses for investors who relied on the misrepresentations.
S&P said in a statement that it decided the settlement was in the best interests of the company and its shareholders. The company did not admit wrongdoing.
