February 4, 2015
On February 3, 2015, the Department of Justice ("DOJ") and 19 states plus the District of Columbia announced a $1.375 billion settlement agreement with Standard & Poor's Financial Services LLC, ("S&P") and its parent corporation McGraw Hill Financial Inc.. The settlement addresses DOJ's allegations that S&P had defrauded investors in structured financial products and resolves DOJ's and the states' 2013 lawsuit against S&P, which alleged that investors incurred substantial losses on Residential Mortgage-Backed Securities ("RMBS") and Collateralized Debt Obligations ("CDOs") as a result of inflated ratings issued by S&P. Among the assertions were that the ratings had been compromised by S&P's business relationships with issuer investment banks. Part of the settlement included the following stipulation:
Pursuant to the terms of the Settlement Agreement, defendants McGraw Hill Financial, Inc. (formerly known as The McGraw-Hill Companies, Inc.) and Standard and Poor's Financial Services, LLC (collectively "defendants") have filed a withdrawal of defendants' Eleventh Affirmative Defense, which asserted defendants' claim that the United States filed this action in retaliation for Standard and Poor's Ratings Services' 2011 decisions to place on credit watch negative and subsequently downgrade the credit rating of the United States.
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