The U.S. Justice Department slapped Standard & Poor’s Rating Services with a lawsuit claiming the agency sidestepped its own standards when rating mortgage bonds that collapsed during the financial crisis, resulting in billions of dollars in losses for investors.
U.S. Attorney General Eric Holder’s civil charges, filed late Monday against S&P, are the first federal enforcement charges against a credit rating firm over the financial crisis.
Reports say the government is going after S&P to the tune of more than $1 billion.
Following a report in The Wall Street Journal Monday afternoon that the government planned to file the suit, S&P acknowledged it was expecting the action and claimed the firm was being wrongly punished by the U.S. government for “failing to predict” the housing meltdown or financial crisis.
New York-based S&P, one of the three major rating firms, has denied any wrongdoing. The firm said in a statement before the government filed the suit that it would be “entirely without factual or legal merit.”