Standard & Poor’s Says U.S Hid Role With States in CourtChris Dolmetsch and David McLaughlin
McGraw-Hill Cos. accused the U.S. Justice Department of failing to disclose in court its collaboration with 17 states suing its Standard & Poor’s unit over alleged consumer-protection and unfair-trade violations.
McGraw-Hill raised the issue in a letter to a federal judge in Connecticut as it fought to consolidate the state lawsuits in U.S. court while the Justice Department pushes to keep the cases under state jurisdiction. The New York-based company has filed papers in several federal courts seeking to move the cases.
The Justice Department and state attorneys general sued S&P in February. The U.S. accused the company of falsely representing that its ratings were objective and independent, claiming Standard & Poor’s weakened ratings criteria to maintain and increase market share.
In the filing yesterday, McGraw-Hill said the Justice Department should have disclosed in a March 29 filing opposing the move to federal court that it’s a “publicly declared ally of and collaborator” with Connecticut.
“From the start, federal and state authorities have worked together in planning and preparing federal and state cases against S&P,” McGraw-Hill said in the filing.
“That is not a criticism, an accusation or a statement of opinion,” the company said. “It is a fact based on public statements of officials of both federal and state entities.”
Separately, state attorneys general filed documents opposing S&P’s effort to consolidate the state actions for pretrial proceedings in New York. S&P has said the cases should be consolidated because they involve common factual questions and “are, in effect, a single hindsight-infused attempt by the states to lay blame with S&P for failing to predict the financial crisis and they should be treated collectively.”
Connecticut Attorney General George Jepsen said consolidation isn’t justified. His office argued that each lawsuit is based on the laws of a different state and that transfer and consolidation of the cases to New York is inconvenient.
“S&P is a large, multinational company and exposure to personal jurisdiction in each of the plaintiff states is an attendant privilege of S&P’s decision to do business in each of those jurisdictions,” Jepsen’s office said.
The company isn’t entitled to consolidation “simply because multiple attorneys general allege that S&P violated the laws of states in which S&P has chosen to do business.”
The Connecticut case is Connecticut v. McGraw-Hill Cos., 13-00311, U.S. District Court, District of Connecticut (New Haven). The Justice Department case is U.S. v. McGraw-Hill Cos., 13-cv-00779, U.S. District Court, Central District of California (Los Angeles).