S&P to Pay $1.4 Billion in Settlement Over Mortgage Securities Ratings
Graw Hill Financial Inc. said it agreed to pay $1.4 billion to settle government allegations that its Standard & Poor’s ratings company doctored the credit ratings on billions of dollars of mortgage securities during the run-up to the financial crisis.
S&P is expected to settle litigation over its role in financial crisis
The announcement, which was expected, ends nearly three years of often bitter litigation that pitted the Justice Department and 19 state attorneys general, including California Atty. Gen. Kamala D. Harris, against the world’s largest credit-rating company over its role in causing one of the worst financial calamities in history.
S&P said it settled the matter to “avoid the delay uncertainty, inconvenience, and expense of further litigation.”
Under the terms of the deal, the Justice Department will get half the settlement amount, or $687.5 million, and the states, plus the District of Columbia, would get the other half, with California receiving $210 million, according an announcement by California Atty. Gen. Kamala D. Harris. The bulk of California’s share would go to the state’s two main public pension funds, the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, to settle claims over losses sustained on mortgage securities after relying on allegedly faulty S&P ratings.