“Today's settlement is a victory for consumers including pension plans and small businesses who rightfully expected that securities ratings by Standard & Poor’s accurately reflected the safety of those investments,” Blumenthal said.
The settlement deal announced on Tuesday reached by the US Department of Justice (DOJ) and state attorneys oblige the S&P to pay the federal government a penalty of $687.5 million, the largest ever paid by a ratings agency, according to a statement from US Attorney General Eric Holder on Tuesday.
Nineteen US states and the District of Columbia will receive the remainder of the S&P funds, according to the DOJ.
Blumenthal said S&P had failed consumers, pension plans and small businesses by “violating the public’s trust and helping to enable a global financial collapse from which we have still yet to fully recover.”
According to the US Securities and Exchange Commission (SEC), the agency responsible for enforcing federal security laws, S&P intentionally overestimated risky mortgage securities grades and was subsequently banned from grading bonds backed by commercial mortgages for one year.
S&P is the world’s largest credit rating agency which, along with Fitch and Moody’s, accounts for nearly 95 percent of credit ratings around the world.
