Magazine article American Banker

DOJ Resists Effort by S&P to Move Ratings Suits to New Venue

Magazine article American Banker

DOJ Resists Effort by S&P to Move Ratings Suits to New Venue

Article excerpt

Byline: Brian Browdie

The U.S. government is resisting an effort by Standard & Poor's to move a string of lawsuits by states that charge the ratings agency with misleading investors to the federal level.

S&P, in papers filed on March 25 with the U.S. District Court in Hartford, Conn., asked the court to take over a suit brought against the company by the state's attorney general, George Jepsen. Officials in 17 states and the District of Columbia have charged S&P with rating securities backed by residential mortgages more highly than they should have been in the run-up to the financial crisis.

The ratings agency argues that the state lawsuits overlap with charges against the company by the Justice Department in a lawsuit filed in February. The cases allege "virtually identical factual and legal theories that seek to regulate S&P's conduct in the very areas that are at the heart of the federal regulatory scheme," S&P wrote.

On Friday the Justice Department pushed back, charging in court papers that S&P failed to sufficiently support its request. "Based on the nature of the causes of actions alleged by the states...there is no federal-question jurisdiction justifying removal" Justice officials wrote.

An S&P spokesperson referred a request for comment to the company's court filing. It was not immediately clear when the court might rule on S&P's request.

A DOJ official did not respond immediately to a request for comment on its filing, which was first reported by Reuters. …

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