“Moody’s to Pay $864 Million to Settle Inquiry Into Inflated Ratings,” The New York Times
January 13, 2017
Moody’s Corp. has agreed to pay nearly $864 million to settle federal and state claims it gave inflated ratings to risky mortgage investments in the years leading up to the financial crisis.
The deal was struck among the New York-based rating agency, the Justice Department and the attorneys general for 21 states and the District of Columbia. Cohen Milstein Sellers & Toll PLLC represented the co-lead state, Mississippi, and the state of New Jersey.
The settlement agreement calls for $437.5 million to go to the Justice Department and $426.3 million to be divided among the states and the District of Columbia.
Moody’s — along with the other two major rating agencies, Standard & Poor’s and Fitch — were widely criticized for giving low-risk ratings to the risky mortgage securities being sold ahead of the crisis, while they reaped lucrative fees.