Illinois AG sues S&P

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The Illinois Attorney General has filed a lawsuit against Standard & Poor’s, claiming that the agency gave fraudulently high ratings to risky mortgage-backed investments in the years prior to the 2008 housing market crash

January 31, 2012
standard and poor, credit ratings, investment, credit rating

standard and poor, credit ratings, investment, credit rating

The Illinois Attorney General has filed a lawsuit against Standard & Poor’s, claiming that the agency gave fraudulently high ratings to risky mortgage-backed investments in the years prior to the 2008 housing market crash, according to the Chicago Sun-Times.

Attorney General Lisa Madigan filed the suit last week in the Cook County Circuit Court. The suit alleges that S&P “compromised its independence” by giving its highest ratings to “unworthy, risky investments as a corporate strategy to increase its revenue and market share,” said the attorney general’s office in a written announcement of the suit, according to the Sun-Times.

The suit alleges S&P “ignored the increasing risks posed by mortgage-backed securities” and instead assigned ratings that were favorable to its client base and its own profits, the statement said.

In response to the suit, Standard & Poor’s spokesman David Wargin said: “This case is without merit and we will defend ourselves vigorously.”

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