$5 Billion Lawsuit Filed Against The Standard & Poor’s By Justice Department
Northern, WI 02/06/2013 (avauncer) - A lawsuit has been filed against the credit ranking company, the Standard & Poor’s by California stating that the company published ratings which caused nearly $1 billion to the state’s public pension funds.
State Attorney General, Kamala Harris said that the state is seeking $4 billion from the lawsuit. The lawsuit has been filed in San Francisco Superior Court against Standard & Poor’s for violation of the California’s false claim act. This announcement was made after the US Justice Department had said that it is seeking $5 billion from the rating agency in fraud for misleading ratings.
According to US Attorney General Eric Holder, the ratings agency was functioning under conflict of interest as it passed judgment on sub-prime mortgage securities banks bundled together even before the collapse of the housing market bubble.
On the other hand, according to the Standard & Poor’s, its ratings were unbiased, objective and independent and were not influenced by any conflict of interest.
According to Harris, although Standard & Poor’s pretends to be an independent agency, it is in fact contrary.
According to the evidence, a security analyst of the Standard & Poor’s sent an email with a spoof of Talking Heads song ‘Burning Down The House’ wherein the lyrics were changed and made fun about the collapsing of the house market. This email was allegedly sent in March, 2007 which was further forwarded to other colleagues. After 2 days of follow-up on the video showed the analyst singing while colleagues laughed.
One of the analysts who had listed to the spoof, later evaluated mortgage securities of highly and eventually the value of those securities collapsed.
The S&P’s vehemently denies the allegations and plans to defend themselves till the end.