Photo courtesy of Chicago Tribune
Illinois Attorney General Lisa Madigan has sued Standard & Poor’s (S&P), claiming the financial services company inflated credit ratings to risky mortgage-backed securities, sparking the ongoing housing and financial crises. Madigan says in doing so, the company—a subsidiary of The McGraw Hill Cos.—committed fraud.
"S&P was making hundreds of millions of dollars a year rating these deals," Madigan told the Chicago Tribune last week. "Without the rating agencies as enablers, none of these securities would have been able to be purchased by many investors."
In her suit, Madigan says McGraw Hill and S&P violated state consumer fraud laws and engaged in deceptive trade practices. The suit seeks to recover profits derived from S&P’s inflated rates, as well as fine the companies $50,000 for each violation.
S&P spokesman David Wargin said "The case is without merit, and we will defend ourselves vigorously."
Read more about Illinois’ suit against S&P.