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Moody’s Falls After Surpassing Level Reached Before S&P Lawsuit

Moody’s Corp. (MCO), the second-largest credit rater, fell after surpassing its closing level before the Justice Department on Feb. 4 sued its biggest competitor, Standard & Poor’s.

Moody’s closed at $54.30 in New York, after reaching as high as $55.56, surpassing its closing level on Feb. 1, the last trading day before the lawsuit was filed, according to data compiled by Bloomberg. The New York-based company has gained 25.2 percent since Feb. 8.

The Justice Department lawsuit against S&P, a unit of McGraw-Hill Cos. (MHP), alleges the world’s largest credit rater inflated grades on mortgage-backed securities to win business from Wall Street banks. New York-based McGraw-Hill said in a Feb. 5 statement that the lawsuit is without merit and asked to have it dismissed earlier this week. The company has gained 21.4 percent to $51.81 since Feb. 8, below the $58.34 reached before the lawsuit.

Moody’s, which hasn’t been sued for fraud, has been under investigation by the Justice Department since at least July 2011. The firm’s grades on the collateralized debt obligations named in the government’s case are almost “identical” to those from S&P, according to a research report from Washington-based equity research firm Height Analytics LLC.

To contact the reporter on this story: Matt Robinson in New York at Mrobinson55@bloomberg.net.

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net.

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