As a follow up to our recent blog post about the SEC’s fine and suspension of Standard & Poor’s, it has just been reported that Standard & Poor’s will pay $1.375 billion to settle lawsuits brought by the U.S. Department of Justice and 20 attorneys general around the country regarding S&P’s bond ratings leading up to the 2008 financial crisis. The settlement is expected to be announced as early as next week. As we stated in our last blog about S&P, we think it has been a long time coming for the rating agencies to be held accountable for their roles in the various securities fraud that caused the near implosion of the U.S. economy in 2008.
This settlement would bring the federal and state governments’ suits against S&P to an end. Those lawsuits focused on the overly rosy ratings that S&P assigned to mortgage-backed securities and other bond deals that ended up imploding when massive defaults swept across the country. Those defaults ultimately caused massive investor losses.