Government Plans to Sue S&P Alleging Fraudulent Ratings

The financial press is reporting that the U.S. Department of Justice, as well as state officials, plan to file civil fraud charges against Standard & Poor's Ratings Service, charging that the firm fraudulently rated mortgage bonds.  This would be the first government suit against a ratings firm related to the financial crisis.  The company issued a statement stating that any suit would be "entirely without factual or legal merit."

Settlement discussions reportedly broke down because the government was talking about a settlement figure around $1 billion, a somewhat higher figure that the parent company's profits for last year.

NYTimes, Dealbook, U.S. and States Prepare to Sue S.&P. Over Mortgage Ratings

WSJ, U.S. and States Prepare to Sue S.&P. Over Mortgage Ratings