FOR IMMEDIATE RELEASE
Tuesday, February 05, 2013
Contact: Communications Department, (573) 526-0949
Attorney General Koster and Secretary of State Kander file suit against Standard and Poor’s, alleging fraudulent credit-rating procedures
Kansas City, Mo. — Today Attorney General Chris Koster and Secretary of State Jason Kander joined federal and state authorities seeking to hold Standard and Poor’s accountable for alleged misconduct involving the company’s rating of Mortgage-Backed Securities at the heart of the nation’s financial crisis.
Attorney General Koster filed the State’s complaint in the Circuit Court of Jackson County. The complaint alleges that, despite S&P’s repeated statements emphasizing its independence and objectivity, S&P, influenced by its desire to earn lucrative fees from its investment bank clients, knowingly assigned inflated credit ratings to toxic assets packaged and sold by the Wall Street investment banks.
This alleged misconduct began as early as 2001, became particularly acute between 2004 and 2007, and continued into at least 2011.
Mortgage-backed securities were at the center of the financial crisis. These financial products, including residential mortgage-backed securities (RMBSs) and collateral debt obligations (CDOs), derive their value from the monthly payments consumers make on their mortgages.
“We believe that countless investors and market participants, including state regulators, were misled by S&P’s promise that its analysis was independent and objective. S&P violated the trust that it purposefully cultivated with the marketplace, leading to disastrous results,” Attorney General Koster said.
Regarding the lawsuit, Secretary Kander, Missouri’s chief securities regulator, said, “The consequences of S&P’s irresponsible decisions can be felt far beyond Wall Street. Missourians trusted S&P’s supposedly independent investment analysis, but it appears that trust was betrayed to protect S&P's profits.”
A member of Kander’s staff will be appointed to the lawsuit as a Special Assistant Attorney General.
Missouri is among a number of states that are pursuing claims against Standard and Poor’s based on the company’s allegedly fraudulent practices. Other states include Connecticut, Mississippi, Illinois, Arizona, Arkansas, California, Delaware, the District of Columbia, Idaho, Iowa, North Carolina, Maine, Pennsylvania, Tennessee, and Washington.
The Department of Justice also filed suit yesterday in the Central District of California.
« view more News Releases