Way Too Little, Way Too Late: Department of Justice to Sue Moody’s Over Pre 2008 Mortgage Securities Ratings

Fail Stamp

Feds to sue Moody’s over mortgage securities ratings

The Department of Justice plans to sue Moody’s over valuations the company assigned to mortgage-backed securities in the run-up to the nation’s financial crisis in 2008, the financial ratings giant said Friday.

Investors sent Moody’s (MCO) shares down more than 5.4% or $5.85 to a $102.24 close.

Prosecutors wrote in a letter Sept. 29  that the civil complaint would be filed in New Jersey federal court against Moody’s and its Moody’s Investors Service unit, the company disclosed in a litigation update included with its higher-than-forecast earnings results for the third quarter.

Following the global credit crisis of 2008, Moody’s has periodically received subpoenas and inquiries from various governmental authorities, including the US Department of Justice (DOJ) and states attorneys general. In a letter dated September 29, 2016, the DOJ stated that it is preparing a civil complaint to be filed against Moody’s and MIS in the US District Court for the District of New Jersey alleging certain violations of the Financial Institutions Reform, Recovery, and Enforcement Act in connection with the ratings MIS assigned to residential mortgage-backed securities and collateralized debt obligations in the period leading up to the 2008 financial crisis. The DOJ also stated that its investigation remains ongoing and may expand to include additional theories. A number of states attorneys general have indicated that they also expect to pursue similar claims under state law, which claims may include additional periods, theories, asset classes or activities. The Company is continuing to respond to the DOJ’s and states’ subpoenas and inquiries.

The complaint will allege federal violations related to ratings the company “assigned to residential mortgage-backed securities and collateralized debt obligations,” the company’s disclosure said.

“The DOJ also stated that its investigation remains ongoing and may expand to include additional theories,” Moody’s said.

Why bother…

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4closureFraud.org

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