The Securities and Exchange Commission is scrutinizing the method Standard & Poor’s used to cut the U.S.’s credit rating and whether the firm properly protected the confidential decision, according to a person with direct knowledge of the matter.
As Standard & Poor’s considered the first ratings downgrade of the world’s biggest economy in late July, some of the largest bond investors held undisclosed meetings with the firm that would ultimately strip the U.S. of its AAA grade.
Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.
Former U.S. Treasury Secretary Timothy Geithner told McGraw Hill Financial Inc. Chairman Harold W. McGraw III in 2011 that Standard & Poor’s downgrade of the U.S. debt would be met by a response, S&P said.
Galleon Group LLC’s Raj Rajaratnam, potentially facing almost two decades in prison, will have an “uphill struggle” in seeking to overturn his conviction in the biggest insider-trading trial since the 1980s, a former prosecutor said.
Eleven days after lowering the credit rating on the U.S. for the first time, Standard & Poor’s is suffering a downgrade among global investors as American bonds are proving world beaters -- undermining S&P’s mathematical assumptions -- and prompting disbelief among political scientists months after the company upgraded China because of the stability fostered by Communist Party rule.
The Justice Department decision to sue Standard & Poor’s has investors asking why Moody’s Investors Service and Fitch Ratings weren’t targeted for awarding the same top grades to troubled mortgage bonds and other debt securities.