S&P
nears settlement on real-estate bond ratings: WSJ
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[December 26, 2014]
(Reuters) - Standard & Poor's
Ratings Services is nearing a settlement with regulators over their
investigation of how the company graded real-estate bonds, the Wall
Street Journal reported, citing people familiar with the matter.
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The proposed deal, which could be reached as early as next month, is
a joint settlement with the Securities and Exchange Commission, New
York Attorney General Eric Schneiderman and Massachusetts Attorney
General Martha Coakley, the newspaper reported.
(http://on.wsj.com/1tiyOP6)
The settlement could involve a suspension of S&P for several months
or even a year from rating some deals and a fine of at least $60
million, the Journal said.
S&P spokeswoman Catherine Mathis, representatives at the SEC, the NY
AG's office and Coakley's office could not be reached for comment
outside regular U.S. business hours.
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In October, S&P's parent McGraw Hill Financial Inc said it was in
"active" settlement talks with federal and state regulators over its
ratings on six commercial mortgage-backed securities and took a $60
million charge in the third quarter for a possible accord.
S&P suffered a huge blow to its commercial mortgage-backed
securities business in 2011, after a major error on a $1.5 billion
deal caused its market share to shrink.
It isn't clear whether S&P will be asked to admit wrongdoing, the
Journal said.
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The U.S. Department of Justice sued S&P for $5 billion in February
2013, accusing it of issuing inflated ratings before the 2008
financial crisis to win more fees from issuers, and failing to
downgrade debt backed by mortgage-backed securities fast enough.
That lawsuit remains pending.
The rating agency also faces related lawsuits by many U.S. states.
Its main U.S. rivals, Moody's Investors Service and Fitch Ratings,
do not face similar lawsuits.
(Reporting by Supriya Kurane in Bengaluru; Editing by Sunil Nair)
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