S&P May Be Sued by Additional States, Connecticut Says
Standard & Poor’s may be sued by more states over credit ratings on mortgage products, adding to state and federal lawsuits filed against the company, Connecticut’s attorney general said.
Connecticut Attorney General George Jepsen, who is leading a multistate coalition, said some states are considering lawsuits against the McGraw-Hill Cos. unit in addition to at least 16 that have already sued.
“We know some states are actively considering it,” Jepsen said yesterday in a phone interview.
The U.S. Justice Department sued Standard & Poor’s on Feb. 4, accusing the company of defrauding investors by assigning inflated credit ratings to mortgage-backed securities and collateralized debt obligations.
Connecticut, Mississippi and Illinois sued Standard & Poor’s previously. Thirteen states and the District of Columbia sued this week with the Justice Department, according to a statement from Jepsen’s office. Connecticut also has a lawsuit pending against Moody’s Investors Service.
Jepsen declined to comment on how many states are considering lawsuits and whether officials are investigating Moody’s and Fitch Ratings.
New York Attorney General Eric Schneiderman is investigating whether S&P, Moody’s and Fitch violated a 2008 settlement that was reached with his predecessor Andrew Cuomo as well as conduct by the companies since that agreement expired at the end of 2011, according to a person familiar with the matter.
Massachusetts Attorney General Martha Coakley is also investigating S&P, spokesman Brad Puffer said in an e-mail.
“Our office is engaged in our own related investigation into this matter and we are closely monitoring this lawsuit filed by other attorneys general,” he said.
The U.S. case is U.S. v. McGraw-Hill, 13-00779, U.S. District Court, Central District of California (Los Angeles).
To contact the editor responsible for this story: John Pickering at Jpickering@bloomberg.net