Friday, November 20, 2009

Ohio Sues Credit Rating Agencies

Ohio’s attorney general sued Standard & Poor’s, Moody’s and Fitch Ratings on Friday, asserting that they provided misleading credit ratings that led to hundreds of millions of losses for state funds.
The official, Richard Cordray, filed the lawsuit in United States District Court for the Southern District of Ohio on behalf of five Ohio funds that assert they lost more than $457 million because of “false and misleading ratings” of mortgage-backed securities by the ratings agencies.
Officials at Moody’s and Standard & Poor’s, which is owned by McGraw-Hill, could not be immediately reached for comment. A spokesman for Fitch Ratings, which is owned by Fimalac S.A., had no immediate comment.
Ohio’s lawsuit is the latest in a string of actions against the ratings agencies, which have been criticized for feeding the housing slump and credit market turmoil by assigning high ratings to risky securities that later tumbled in value.
Attorney General Andrew Cuomo of New York ended an investigation of rating agencies last year by striking a pact that changed the way they charge fees for reviewing mortgage-backed securities.
Attorney General Richard Blumenthal of Connecticut has also investigated the rating agencies.
Mr. Cordray’s lawsuit was filed on behalf of five major funds — the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the Ohio Police & Fire Pension Fund, the School Employees Retirement System of Ohio and the Ohio Public Employees Deferred Compensation Program.
Go to Article from Reuters via The New York Times »

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