Standard & Poor’s Sued by New Jersey Over Bond Ratings
Standard & Poor’s Financial Services LLC and its parent, McGraw Hill Financial Inc. (MHFI), were sued by New Jersey for allegedly failing to give objective ratings to mortgage-backed securities, the state’s attorney general said.
Standard & Poor’s harmed New Jersey consumers with claims that its ratings of the securities were independent when they were in fact driven by the company’s sales goals, the attorney general said today in a statement. The filing couldn’t immediately be confirmed in court records.
“Standard & Poor’s was not providing independent investor information, but instead acting in its own business interests, and in the interests of favored clients whose fees provided the company with a significant revenue stream,” Acting Attorney General John J. Hoffman said.
The deceptive ratings for mortgage-backed securities and other structured financial products were assigned from at least 2001 to 2008, according to a copy of the complaint posted on the attorney general’s website.
Edward Sweeney, a spokesman for New York-based Standard & Poor’s, didn’t immediately return a call seeking comment on the lawsuit.
The case is Hoffman v. McGraw Hill Financial Inc., Superior Court of New Jersey, Chancery Division (Newark, New Jersey).
To contact the reporter on this story: Christie Smythe in federal court in Brooklyn at email@example.com;
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org