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NC joins lawsuit against rating agency S&P

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Attorney General Roy Cooper announced Tuesday that North Carolina has joined a lawsuit filed by federal authorities and several other states alleging that Standard and Poor's inflating its ratings on some securities in the lead up to the financial crisis.

Cooper filed a lawsuit in Wake County Superior Court asking the court to stop S&P from "claiming objectivity to the public and require the company to change the way it does business."

The allegations against S&P relate to ratings it made on subprime mortgages. The federal and state complaints allege that "S&P’s analyses were in fact influenced by fees paid by its investment bank clients. As a result, the company knowingly inflated credit ratings for high-risk assets packaged and sold by Wall Street banks."

Cooper alleges S&P, as early as 2001, publicly declared its objectivity while privately compromising its ratings to keep the business of investment banks issuing the securities. The lawsuit alleges the misconduct became acute between 2004 and 2007, and continued until 2011.

More than dozen other states filed similar lawsuits Tuesday. The U.S. Department of Justice filed its suit Monday.

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About the blogger

Business reporter David Bracken came to the N&O in 2004. He covers commercial and residential real estate. Contact David at 919-829-4548 or e-mail him.