Connecticut Leads States, Joins Feds In Challenging S&P On Ratings

Conn. Attorney General George Jepsen joined Eric Holder at a press conference in Washington Tuesday to announce that the Department of Justice, the District of Columbia, and 16 states are filing civil charges against Standard & Poors Ratings Service for knowingly assigning high ratings to subprime mortgage bonds, misrepresenting the credit risk to investors. Holder said “the ratings were affected by significant conflicts of interests” due to S&P’s relationship with investment banks and that despite warnings from analysts as early as 2003, the agency continued to issue inflated ratings through 2011.

“Contrary to what S&P was publicly representing, S&P served its own financial interests and those of the investment banks,” said Jepsen who is leading the multi-state coalition and assisted the DOJ in its early investigation. Connecticut’s lawsuit, filed in 2010, is currently pending in the Hartford Superior Court.

“I hope this action will help vindicate victims of rating agency abuses,” said Sen. Blumenthal, who issued a statement after the press conference. “Victims lost homes and life savings, and Connecticut lost jobs and taxpayer dollars, which is why my office sued them.” Blumenthal was Connecticut’s Attorney General when the state filed charges.