At Issue:  Standard & Poor’s Ratings of Mortgage Bonds Before the Financial Crisis 

Jean Eaglesham, Jeannette Neumann, and Evan Perez report at the Wall Street Journal that S&P is under fire.  Here’s more:

The Justice Department and state prosecutors intend to file civil charges alleging wrongdoing by Standard & Poor’s Ratings Services in its rating of mortgage bonds before the financial crisis erupted in 2008, according to people familiar with the matter.

The allegations likely would be made in lawsuits by federal and state officials that are expected to be filed as soon as this week, the people said. The alleged wrongdoing by S&P, a unit of McGraw-Hill Cos., MHP -3.89% centers on allegations related to the model used by S&P to rate mortgage bonds.

The likely move by U.S. officials would be the first federal enforcement action against a credit-rating firm for alleged illegal behavior related to the crisis. Several state attorneys general are expected to join the case, making it one of the highest-profile and widest-ranging enforcement crisis-era crackdowns.

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How Legitimate Were S&P Ratings?  The U.S. and States Are Suing to Find Out. 

Read the full story here

Update:  5:15 CST:  The SEC vs S&P suit has now been upgraded to “egregious” (per Eric Holder) and is for $5 BILLION. Reuters and Financial Times

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