Wall Street Rating Agency Sued by Federal Government for Fraud
Restored from the Empower Network archive (2011–2017), lightly edited to meet our current advertising standards. Views are the original author’s.
More than five years have gone by since the mortgage melt down, and credit rating agencies like Standard & Poor’s are still trying to use their First Amendment Rights as a shield against pissed off investors who have demanded fair compensation for advice on the housing market that lead to the bubble burst. This is the first Wall Street Rating Agency Sued by Federal Government for fraud.
Wall Street Rating Agency Sued
The ratings agencies were so dead wrong about the A grades they issued on mortgage-backed bonds that they were later proved basically worthless. “But those ratings were merely opinions!”, they have said, entitled to the same constitutional protection as any other form of free speech. What is going on over on Wall Street and with these companies that are supposed to give us advice on investing? Wall Street Rating Agency Sued by Federal Government for Fraud by the Department of Justice.
Wall Street Rating Agency Sued – Other Key Players to Be Named Later
A lawsuit by the Justice Department is the first act against a ratings agency by a law enforcement agency. The Department of Justice said It would we filing several other high-profile mortgage fraud cases against key players in the middle of the financial crisis, including, but not limited to Bank of America and Morgan Stanley, just a start for Wall Street Rating Agency Lawsuits.
Wall Street Rating Agency Sued By Federal Government for Fraud – So, What Went Wrong?
When the housing bubble burst, a lot of loans began to fail in huge numbers. The Financial Crisis Inquiry Commission determined that the ratings agencies were a “key cause” of the crisis. Some say these borrowers should have never been approved, that may or may not be true. The American Public once again gets stuck holding the bill for the Government’s inability to step up and actually police what happens in this country. Its not for me to decide but I think someone needs to do some digging and give some feedback about the Wall Street Rating Agency Sued by Federal Government for Fraud
Wall Street Rating Agency Sued by Federal Government for Fraud – The Whole Story?
More on this Story from the Huffington Post:
On Monday, multiple news outlets reported that the Department of Justice was preparing to bring a civil fraud lawsuit against S&P as early as this week. The lawsuit will focus on S&P’s 2007 ratings of mortgage bonds, known as collateralized debt obligations, the company confirmed. As S&P confronts its potentially most serious legal challenge, legal experts said it must face a new reality: its free speech defense may not play well in court.
“This defense has largely been pushed to one side,” said James Cox, a securities law professor at Duke University. “The argument is now viewed skeptically. Courts won’t cut them much slack.”
In 2010, San Francisco Superior Court Judge Richard Kramer ruled that the First Amendment did not protect the ratings agencies from liability for ratings issued on certain types of private investments. In that case, the plaintiff is the giant California Public Employees’ Retirement System, known as Calpers.
In 2011, an Albuquerque, N.M., federal judge dismissed the free speech argument raised by lawyers for the ratings agencies because, in part, the private trusts that technically purchased the mortgage bonds were not “public figures,” like publically traded companies, entitled to more protections, he said.
“The court rejects the rating agency defendants’ arguments that the First Amendment provides any protection to them under the facts of this case,” Judge James Browning wrote.
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