Connecticut AG Blumenthal sues Moody’s, S&P; says mortgage securities ratings “misleading”
By Stephen Bernard, APWednesday, March 10, 2010
Connecticut AG sues Moody’s, S&P over debt ratings
NEW YORK — Connecticut Attorney General Richard Blumenthal is suing Moody’s Investors Service and Standard & Poor’s over ratings the agencies issued on certain investments.
In the civil lawsuit filed Wednesday, Blumenthal alleges Moody’s and S&P knowingly assigned false ratings to complex investments that helped push the country into recession.
The investments were securities backed by pools of mortgages. Those investments have lost much of their value as mortgage defaults skyrocketed in recent years.
The attorney general says the ratings process was “deceptive and misleading.” He says Moody’s and S&P were swayed by lucrative fees received for rating the debt.
A spokesman for S&P’s parent company McGraw Hill says the suit has no merit and S&P will defend itself against the charges. A Moody’s spokesman was not immediately available to comment.
