NC Attorney General challenges Standard and Poor in lawsuit - | WBTV Charlotte

NC Attorney General challenges Standard and Poor in lawsuit

RALEIGH, NC (WBTV) -

The following is a release from the North Carolina Department of Justice. It has not been edited.

Credit rating agency Standard and Poor's knowingly inflated its ratings for certain risky securities, contributing to the nation's financial crisis, Attorney General Roy Cooper alleged Tuesday in a lawsuit he filed along with several other states and federal authorities.

"Investors thought they were getting objective information but they got misled and our entire economy paid a heavy price," Cooper said. "These misrepresentations played a major role in creating the national financial crisis, and they must be prevented from happening again."

Cooper filed a lawsuit today in Wake County Superior Court asking the court to stop Standard and Poor's (S&P) from claiming objectivity to the public and require the company to change the way it does business.

Cooper and the other state attorneys general bringing similar actions seek to hold S&P accountable for misrepresenting its objectivity in rating securities that were backed by subprime mortgages. Investors and market participants relied on S&P to provide independent and objective credit ratings for these financial products. The federal and state complaints allege that S&P's analyses were in fact influenced by fees paid by its investment bank clients. As a result, the company knowingly inflated credit ratings for high-risk assets packaged and sold by Wall Street banks.

Structured finance securities backed by subprime mortgages were at the center of the financial crisis. These financial products, including residential mortgage-backed securities (RMBS) and collateral debt obligations (CDOs), derive their value from the monthly payments consumers make on their mortgages. 

Cooper alleges that S&P publicly declared its objectivity while privately compromising it to get and keep the business of investment banks that were issuing these financial products and paying S&P to analyze and rate them. Assessing actual credit risk was less important to S&P than making money and winning new business, and the company adjusted its models to assign as many top ratings as possible so it could earn more money from its clients. S&P also delayed downgrading certain risky investments in order to continue earning lucrative fees.

S&P's alleged misconduct began as early as 2001, became particularly acute between 2004 and 2007, and continued until as recently as 2011.

Along with North Carolina, states filing actions against S&P today include Arizona, Arkansas, California, Colorado, Delaware, the District of Columbia, Idaho, Iowa, Maine, Missouri, Pennsylvania, Tennessee, and Washington. The U.S. Department of Justice also filed suit against S&P on Monday. Connecticut, Illinois and Mississippi previously filed actions against S&P. 

Copyright 2013 WBTV. All rights reserved.

  • Local NewsMore>>

  • Victims and gunmen identified in fatal shooting at a Union Co. hotel

    Victims and gunmen identified in fatal shooting at a Union Co. hotel

    Sunday, April 22 2018 3:24 PM EDT2018-04-22 19:24:17 GMT
    (Fred Craft | WBTV)(Fred Craft | WBTV)

    Officials are conducting a homicide investigation after Union County police found one person dead and three others injured at a hotel. According to a report, officials say they responded to the Relax Inn on U.S. 74 around 1 a.m. Sunday morning when they located the victims of a shooting.  

    More >>

    Officials are conducting a homicide investigation after Union County police found one person dead and three others injured at a hotel. According to a report, officials say they responded to the Relax Inn on U.S. 74 around 1 a.m. Sunday morning when they located the victims of a shooting.  

    More >>
  • Councilwoman LaWana Mayfield apologizes 'for the hurt that may have been caused' from 9-11 conspiracy Facebook post

    Councilwoman LaWana Mayfield apologizes 'for the hurt that may have been caused' from 9-11 conspiracy Facebook post

    Sunday, April 22 2018 3:22 PM EDT2018-04-22 19:22:30 GMT
    Charlotte City Council member LaWana Mayfield questioned whether the 9-11 terrorist attacks were real in a social media post Monday, saying she is "still waiting for someone to produce pieces of the alleged plane." (Charlotte Observer File Photo)Charlotte City Council member LaWana Mayfield questioned whether the 9-11 terrorist attacks were real in a social media post Monday, saying she is "still waiting for someone to produce pieces of the alleged plane." (Charlotte Observer File Photo)

    Charlotte City councilwoman LaWana Mayfield said on Sunday that she is not going to resign following requests for such about a post she created on Facebook questioning the authenticity of the 9-11 attacks in New York City.  

    More >>

    Charlotte City councilwoman LaWana Mayfield said on Sunday that she is not going to resign following requests for such about a post she created on Facebook questioning the authenticity of the 9-11 attacks in New York City.  

    More >>
  • FIRST ALERT: Heavy rain expected in the beginning of the week

    FIRST ALERT: Heavy rain expected in the beginning of the week

    Sunday, April 22 2018 9:56 AM EDT2018-04-22 13:56:01 GMT

    We are getting a clearer picture now on the timing and arrival of rain for our First Alert Days Monday and Tuesday. We want to emphasize there is no severe weather threat this week, but just don't want anybody to get caught off guard by the heavy rain after such a beautiful weekend.  

    More >>

    We are getting a clearer picture now on the timing and arrival of rain for our First Alert Days Monday and Tuesday. We want to emphasize there is no severe weather threat this week, but just don't want anybody to get caught off guard by the heavy rain after such a beautiful weekend.  

    More >>
Powered by Frankly