S&P Reaches Near $1.4B Settlement with DOJ, 19 States
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iStock/Thinkstock(NEW YORK) — More than eight years after the housing bobble popped, causing near financial meltdown, Standard & Poor’s has agreed to pay nearly $1.4 billion to settle with the U.S. government and 19 states.
The settlement stems from claims that S&P gave strong ratings to shaky investment products that contained risky mortgages. Federal prosecutors also said the ratings firm failed to sound alarms about subprime mortgages because doing so would have hurt the company’s bottom line.
Under the terms of the settlement, the company will pay $687.5 million to the Department of Justice and $687.5 million to the states and District of Columbia, S&P said in a press release Tuesday.
The Justice Department filed its lawsuit against S&P in February of 2013. The attorneys general of the 19 states and D.C. later followed with their own suits.
Meanwhile, S&P also announced that it has reached a separate settlement with the California Public Employees’ Retirement System (CalPERS). The firm said it will pay CalPERS $125 million to “resolve its claims against [S&P] regarding ratings on three structured investment vehicles.”
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