Register for SMS Alerts
or enter your details manually below...
First Name:
Last Name:
Sorry, we couldn't find that email.
Existing users
Sorry, we couldn't find those details.
Enter Email
Sorry, we couldn't find that email.

Moody’s agrees to pay $864 million to US, states over pre-financial crisis ratings

Moody's agrees to pay $864 million to US justice department, 21 states and the District of Columbia for its risky mortgage security ratings ahead of 2008 financial crisis 

14 January 2017, 5:35pm
The credit rating agency Moody’s has agreed to fork out almost $864 million to settle with US federal and state authorities over its ratings of risky mortgage securities in the run-up to the 2008 financial crisis, the US Department of Justice has said.

Moody’s reached the deal with the Justice Department, 21 states and the District of Columbia, resolving allegations that it had contributed to the worst financial crisis since the Great Depression, the department said in a statement.

“Moody’s failed to adhere to its own credit-rating standards and fell short on its pledge of transparency in the run-up to the Great Recession,” Principal Deputy Associate Attorney General Bill Baer said.

Moody’s said it would pay a $437.5m penalty to the justice department, while the remaining $426.3m would be split among the states and Washington DC.

As part of its settlement, Moody’s has also agreed to measures designed to ensure the future integrity of credit ratings, including keeping analytic employees out of commercial-related discussions. Its chief executive must also certify compliance with the measures for at least five years.

Moody’s said that it stands behind the integrity of its ratings and noted that the settlement contains no findings of a violation of law or admission of liability.

Standard and Poor’s, the world’s largest rating firm ahead of Moody’s, entered into a similar accord in 2015, paying out around $1.375 billion.

Connecticut had filed a lawsuit against Moody’s in 2010, while Mississippi and South Carolina later sued the firm, and other states had potential claims.

Connecticut’s lawsuit claimed that Moody’s ratings were influenced by its desire for fees, despite claims of independence and objectivity, and accused the firm of knowingly inflating ratings on toxic mortgage securities.

“Their ratings were directly influenced by the demands of the powerful investment banking clients who issued the securities and paid Moody’s to rate them,” Connecticut Attorney General George Jepsen said in a statement. 

Latest Business News
Business Comment 11:46
Economic Data, Brexit and Bitcoin Futures
Business News 08-12
A proposed €500 million merger of telcos Melita and Vodafone will not go ahead after the companies say they are unable to meet competit...
Law Report 08-12
The First Hall of Civil Court decided it was not competent to hear cases concerning rent issues in the case of Joseph Sammut v Liliana Jalil
Technology 07-12
MITA is not only working to make online services accessible through mobile devices, but is also raising awareness to increase the take-up of...
Business Comment 07-12
Over-charging on meals is like burning the candle from both ends and will cause the catering sector to implode if remedial action is not tak...