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S&P Sued by Justice Departments over credit ratings

The Department of Justice has filed a civil suit against Wall Street’s largest credit rating agency. Standard & Poor’s is accused of knowingly committing fraud by issuing falsely inflated credit ratings between 2004 and 2007. The government estimates that S&P could be liable for $5 billion in damage if found guilty, in what is seen as the first major federal action against a credit rating agency in the wake of the 2008 financial crisis. Sixteen states and the District of Columbia have filed similar suits.

The civil charges by U.S. Attorney General Eric Holder against the New York company, one of the bond-rating industry’s three giants, are the first federal enforcement action against a credit-rating firm over the crisis. Several state attorneys general are likely to join.

S&P said in a statement that the government suit would be “entirely without factual or legal merit,” and denied wrongdoing.