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S&P to Pay $1.375 Billion for Ratings Misconduct

Jaclyn Jaeger | February 3, 2015

Standard & Poor’s Financial Services and its parent company McGraw Hill Financial reached a $1.375 billion settlement today with the Department of Justice, along with 19 states and the District of Columbia, for engaging in a scheme to defraud investors in structured financial products.

S&P will pay $687.5 million to the federal government—the largest penalty ever recovered by a ratings agency. The remaining $687.5 million will be divided among the 19 states and the District of Columbia.

The settlement resolves an investigation launched by the Justice Department in 2009, resulting in a lawsuit that the government filed nearly two years ago. The lawsuit alleged that, from at least 2004 until 2007, S&P engaged in a scheme to defraud investors by knowingly issuing inflated credit ratings for collateralized debt obligations (...

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