Standard & Poor’s says the civil lawsuit threatened by the Department of Justice (DOJ) is without legal merit and unjustified and it will vigorously defend against erroneous claims regarding U.S. CDO ratings from 2007.
One wonders why the DOJ waited more than five years to contemplate legal action and at a point when most legal cases against the ratings agencies have been dismissed. In essence the DOJ now blames the rating agencies for the subprime credit crisis!
Following the announcement the shares of McGraw-Hill dropped US$8. Moody’s shares lost US$6.
McGraw-Hill Companies, Inc. disclosed that the Civil Division of the United States Department of Justice (“DOJ”) has informed the Company that it intends to file a civil lawsuit against S&P focusing on its ratings in 2007 of certain U.S. collateralized debt obligations (“CDOs”). The news made headlines in major media across the globe.
Source: McGraw-Hill Press Release