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The Government's S&P Lawsuit Could Sink McGraw-Hill

A suit seeks $5 billion in penalties from the biggest ratings company
The Government's S&P Lawsuit Could Sink McGraw-Hill
Photograph by Fuse/Getty Images

Let’s cut through the esoteric legal theories and comically incriminating e-mails: By seeking $5 billion in penalties from Standard & Poor’s as punishment for inflating credit ratings, the Obama administration turned its fraud suit into a potential corporate death penalty case.

S&P’s parent, McGraw-Hill, may not survive in its current structure if Attorney General Eric Holder follows through on his draconian civil action. “This alleged conduct is egregious—and goes to the very heart of the recent financial crisis,” Holder said at a press conference on Feb. 5 in Washington. McGraw-Hill, which denies wrongdoing, had net income of $867 million in the past four quarters. It can’t afford to pay $5 billion. McGraw-Hill stock fell more than 20 percent on word of the suit.