IBJNews

State sues S&P over flawed ratings of securities

Back to TopCommentsE-mailPrintBookmark and Share

Indiana has joined a parade of states suing Standard & Poor’s over its awarding of favorable ratings to securities that blew up when the housing market collapsed.

Indiana’s case, filed Thursday in Marion Superior Court, charges S&P with “systematically and intentionally” misrepresenting its analysis of securities backed by commercial or residential mortgages in order to “maximize revenue and market share.”

At least 17 states have filed similar lawsuits. Indiana’s case, filed by Securities Commissioner Chris Naylor, does not specify the amount of damages the state is seeking. It alleges fraud, deception and violations of the Indiana Uniform Securities Act.

S&P, a unit of New York-based McGraw-Hill Cos., has denied wrongdoing and said that any lawsuit would be without merit.

The state says investors relied on S&P to accurately rate the riskiness of various mortgage-backed securities.

Issuers paid the firm and its chief rival, Moody's Investors Service, substantial amounts to assess the investments, which grew ever-more complex through the 2000s. The state charges that S&P's desire to win additional business colored its analysis.

ADVERTISEMENT

  • Charlie stole my comment title
    As I was reading this, the first thought that came to me was 'Bout Time! This crisis ruined more people than Bernie Madoff. Bottom line, don't live beyond your means though.
  • 'bout time
    From Wiki: According to the Financial Crisis Inquiry Report, 73% of the mortgage-backed securities Moody's had rated triple-A in 2006 were downgraded to junk by 2010.[37] In its "Conclusions on Chapter 8", the Financial Crisis Inquiry Commission stated: "There was a clear failure of corporate governance at Moody’s, which did not ensure the quality of its ratings on tens of thousands of mortgage-backed securities and CDOs."[38] ... In April 2013, Moody's reached a settlement avoiding what would have been their first jury trial over crisis-era ratings. The fourteen plaintiffs, were led by Abu Dhabi Commercial Bank and King County, Washington. They claimed lawsuits filed in 2008 and 2009 that Moody's misled them by allegedly inflating ratings on two so-called structured investment vehicles they purchased.[46] ... Somebody screwed up. Another reason: failure of people repay loans that were far beyond their means.

    Post a comment to this story

    COMMENTS POLICY
    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
     
    You are legally responsible for what you post and your anonymity is not guaranteed.
     
    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
     
    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
     
    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
     

    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

    Sponsored by
    ADVERTISEMENT

    facebook - twitter on Facebook & Twitter

    Follow on TwitterFollow IBJ on Facebook:
    Follow on TwitterFollow IBJ's Tweets on these topics:
     
    Subscribe to IBJ
    1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

    2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

    3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

    4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

    5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

    ADVERTISEMENT