Ark. AG's office sues Standard & Poor's

Arkansas attorney general sues Standard & Poor's over US credit ratings in financial crisis

Associated Press

LITTLE ROCK, Ark. (AP) -- The Arkansas attorney general's office is suing credit rating agency Standard & Poor's over the way it issued ratings during the financial crisis.

The court action filed Tuesday alleges that S&P deliberately misled investors by giving inflated ratings to securities backed by subprime mortgages.

The lawsuit filed by Attorney General Dustin McDaniel accuses S&P of allowing its analysts to be influenced by lucrative fees generated by investment banks that were S&P clients.

The value of residential mortgage-backed securities and collateral debt obligations are based on monthly mortgage payments made by consumers.

The federal government is also pursuing $5 billion in penalties against S&P. In responding to that suit, S&P said its ratings reflected its best judgment.

McDaniel alleges S&P violated the Arkansas Deceptive Trade Practices Act.

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