S.&P. Nears Settlement With Justice Over Inflated Ratings
On television and in the courtroom, Standard & Poor’s has waged war against a Justice Department lawsuit. But behind the scenes, the giant bond-ratings agency wants nothing more than to buy peace.
After S.&P. mounted a two-year campaign to defeat civil fraud charges — portraying them as retaliation for cutting the credit rating of the United States — the ratings agency is now negotiating with the Justice Department to settle the case, according to people briefed on the matter.
For S.&P., which is accused of awarding inflated credit ratings to mortgage investments that spurred the financial crisis, the delay in settling may prove costly. The Justice Department and more than a dozen state attorneys general are demanding that S.&P. pay more than $1 billion to settle the case, the people briefed on the matter said, a penalty large enough to wipe out the rating agency’s entire operating profit for a year.
If S.&P. capitulates to the government’s financial demands — and it has privately signaled a willingness to do so, the people said — the settlement would support the conclusion that it is futile to fight government fines.
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