McGraw Hill Financial Inc., owner of the largest credit rater, has appointed Lucy Fato as general counsel, succeeding Kenneth Vittor, who’s retiring after 33 years at the company.
Fato, 47, starts Aug. 4 and joins from Marsh & McLennan Cos., where she served as deputy general counsel since 2005, New York-based McGraw Hill said today in a statement. Vittor, 65, has led the company’s legal department since 1995 and is departing in accordance with the company’s policies for retirement age.
Fato is joining McGraw Hill as it faces lawsuits including one from the U.S. Justice Department over its Standard & Poor’s ratings unit for allegedly giving inflated grades on bonds backed by subprime mortgages in order to win business from Wall Street banks. The securities were eventually downgraded, helping to wipe out almost $11 trillion of household wealth, according to the Financial Crisis Inquiry Commission’s 2011 report.
McGraw Hill has called the Justice Department lawsuit “meritless” and said that it would fight the claims “vigorously.”
Vittor has overseen the company’s defenses, including a victory that it’s entitled to seek evidence from former U.S. Treasury Secretary Timothy Geithner in the Justice Department lawsuit.
The company said Geithner made a “threatening” call to former Chief Executive Officer Harold W. McGraw III after S&P’s downgrade of U.S. debt in 2011. S&P argued its mortgage-bond ratings were being singled out in retaliation for cutting the government’s grade.
The Justice Department and Geithner have denied there is a connection between the downgrade and the lawsuit filed last year.
S&P has also employed a first-amendment defense against faulty ratings, saying that investors can’t sue because those opinions are protected by free-speech rights.