State Of Tennessee Sues Standard And Poor’s

Tuesday, February 5, 2013

Attorney General Bob Cooper on Tuesday joined the Department of Justice and other state Attorneys General in filing enforcement actions against Standard and Poor’s and its parent company, McGraw-Hill, seeking accountability for alleged misconduct by the credit rating agency.  The allegations involved structured finance securities backed by subprime mortgages that were at the heart of the nation’s financial crisis.

The federal and state complaints allege that despite S&P’s repeated statements emphasizing its independence and objectivity, S&P allowed its credit rating analysis to be influenced by its desire to earn lucrative fees from its investment bank clients.  Investors and others in the marketplace relied on credit rating agencies like S&P for accurate ratings because the underlying data for these securities was not publicly available.

This alleged misconduct began as early as 2001, became particularly acute between 2004 and 2007, and continued as recently as 2011.

Structured finance securities backed by subprime mortgages were at the center of the financial crisis.  These financial products, including residential mortgage-backed securities (RMBS) and collateral debt obligations (CDOs), derive their value from the monthly payments consumers make on their mortgages.

“The complaint filed in state court today alleges that investors as well as others in the market were misled by Standard and Poor’s promises that its analysis was independent and objective. Unfortunately, as the complaint alleges, this was not the case, and ratings of mortgage backed securities and collateral debt obligations were influenced by the desire to continue earning lucrative fees,” Attorney General Cooper said. 

Tennessee’s lawsuit seeks relief to stop S&P from making misrepresentations to the public; change the way the company does business; and civil penalties and disgorgement of ill-gotten profits.

The congressionally-appointed bipartisan Financial Crisis Inquiry Commission concluded in its final report that the financial crisis “could not have happened” without ratings agencies such as S&P.

The State’s Complaint may be found on the Attorney General’s website by going to www.tn.gov/attorneygeneral and clicking on “Filings of Interest.”

 


Grand Celebration Marks Completion Of Coolsprings Galleria

CBL & Associates Properties, Inc. (NYSE: CBL), on Tuesday announced the opening of the redevelopment at CoolSprings Galleria in Nashville (Franklin), Tn. Designed to significantly enhance the offerings at the shopping center, the redevelopment of the former Sears location included adding a new mall entrance as well as retail space for a mix of fashion stores, and fine dining ... (click for more)

Haslam, Boyd Announce Ficosa North America To Build New Facility In Putnam County

Gov. Bill Haslam and Economic and Community Development Commissioner Randy Boyd along with Ficosa North America officials announced today the company will expand its Tennessee presence by building a new state-of-the-art facility at the Highlands Business Park in Cookeville.  The automotive supplier will invest $58 million in the Putnam County facility and create 550 jobs.   ... (click for more)

Fisherman Spots Body Floating In The River

A fisherman spotted a body floating in the Tennessee River early Wednesday morning. At approximately 1:50 a.m., the Chattanooga Police Department responded to mile marker 474 of the Tennessee River for a body found. E mergency crews recovered the body of a black male, which was later transported to the Medical Examiner’s Office. F oul play is not suspected at ... (click for more)

Cleveland Councilman Banks Critical Of City Manager Casteel, But Several Council Members Come To Her Defense

Cleveland City Councilman Richard Banks on Tuesday afternoon was critical of City Manager Janice Casteel, but several other council members came to her defense.   The council, at the end of the discussion, voted to establish an evaluation process for city employees.   Ben Moore, a retired pharmacist and life-long resident of Cleveland told the council ... (click for more)

County Officials Need To Provide A Decent Animal Shelter

Once upon a time, a group of citizens concerned about the decaying building housing the Humane Educational Society on Highland Park raised their voices in an outcry about the deplorable state of the HES facility and the over-population of unwanted and unspayed/unneutered cats and dogs in Hamilton County.   What happened then was that the City Council stepped ... (click for more)

Roy Exum: Is It Ever Worth It?

There is a better-than-average chance General John Kelly could soon be named as the new Commandant of the United States Marine Corps. He’s one of four men who have been mentioned in prudent fashion to follow General Joseph Dunford (remember that name for a few minutes) as head of the Corps. General Dunford, who held the job less than a year, has just been chosen by President Obama ... (click for more)