WASHINGTON (AP) — The U.S. government is expected to file civil charges against Standard & Poor’s Ratings Services, alleging that it fraudulently gave high ratings to mortgage debt that later plunged in value and helped fuel the 2008 financial crisis.
The charges would mark the first enforcement action the government has taken against a major rating agency involving the financial crisis.
S&P said Monday that the Justice Department had informed it that it intends to file a civil lawsuit focusing on S&P’s ratings of mortgage debt in 2007. The action does not involve any criminal allegations.
S&P denies any wrongdoing and says any lawsuit would be without merit.
A lawsuit would “disregard” the fact that S&P reviewed the same data on risky mortgages as the rest of the market and U.S. government officials, who publicly said in 2007 that the problems in the subprime mortgage market appeared to be limited, the company said in a statement.
In the statement, S&P said it “deeply regrets” that its ratings on some securities “failed to fully anticipate the rapidly deteriorating conditions in the U.S. mortgage market during that tumultuous time.”
Justice Department spokeswoman Nanda Chitre declined to comment on the matter.