Phoenix - Attorney General Mark Brnovich announced that his Office, the United States Department of Justice, the Attorneys General of 18 other states and the District of Columbia have reached a $1.375 billion settlement agreement with Standard & Poor's Financial Services LLC (S&P). The settlement resolves lawsuits against S&P that alleged it misled investors leading up to the 2008 financial crisis.
Arizona will receive approximately $21.5 million as a result of the settlement. The state sued S&P in February 2013, alleging that S&P misrepresented its objectivity with regard to its structured finance ratings services. According to the lawsuit, S&P repeatedly assured investors that it had procedures in place to maintain the objectivity and independence of its ratings opinions. The State alleged that S&P’s representations were false because its rating methodologies were directly influenced by a desire to please its paying clients, the issuers of the securities, and to generate additional ratings business.
Structured finance securities backed by subprime mortgages were at the center of the 2008 financial crisis. Standard & Poor’s rated the majority of those securities--many of them as investment grade when, according to the lawsuit, they were not.
"Standard and Poor’s benefitted from misleading investors," said Attorney General Brnovich. “I will work with Governor Ducey and legislative leadership to distribute settlement funds appropriately and to help fund essential programs for children, families, seniors and public safety."
The other states and territories involved include: Arkansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Washington, and the District of Columbia.
This matter was handled by Assistant Attorneys General Nancy Bonnell, Brad Keogh, Susan Myers and Dana Vogel. For more information contact the Attorney General's Office at (602) 542-5025.