S&P Faces Federal Lawsuit In Regards To The Economic Crisis
The federal government has accused Standard & Poor, the debt rating agency, of fraud. It states that the agency placed high ratings on risky mortgage bonds that led to the economic crisis five years back.
In a civil complaint filed on Monday, the government states S&P deceived investors saying its ratings were both impartial and not subjective by conflicts of interest. The government states that S&P was more concerned with making money and increasing its market share, which is why it disregarded the risks the investments posed between September 2004 and October 2007.
This is the first action taken since the whole financial crisis ensued.
The government filing, which was done in Los Angeles’ U.S. District Court, asserts the fraud made selling investments to banks more possible. The government also alleges that S&P made sure that banks invested safely.
S&P has repudiated any offense and said a lawsuit would be without worth.
Should S&P be found guilty of any civil violations, it could result in face and limitations on how it conducts business. The government said it would seek financial penalties.
There are no criminal allegations in the action. Critics have been complaining for quite some time about the government’s inability to levy criminal charges against even one Wall Street player.
If there were any criminal charges, it would mean it would need an excessive amount of proof to net jail time.
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