The U.S. Justice Department and many state prosecutors are planning to file suit against rating service Standard & Poors related to allegedly bogus credit ratings issued on mortage bonds. Anybody remotely connected to the securities or cre…dit markets has long felt the rating services were not providing accurate ratings due to the inherent conflict of interest created by the fact they are paid by the issuers they are rating. The suspect ratings evantually lead to billions in investor losses and sparked the global financial crisis. For example both S&P; and Moody’s kept an investment grade rating on Lehman Brothers debt until just days before the firm filed for bankruptcy protection. LB’s failure left investors, many of whom were retirees, holding the bag for the alleged fraudulant actions of the rating services. About time they are taken to task.
The complete NY Times article may be found here.