Attorney General’s lawsuit against Standard & Poor’s leads to $21.5 million recovery for Washington state

Attorney General Bob Ferguson announced that Standard and Poor’s Financial Services LLC will pay Washington state $21.5 million as a result of an investigation into the company’s misleading of investors when it rated structured finance securities in the lead-up to and the years following the 2007-08 financial crisis.

In addition to Washington, the credit rating agency will settle similar claims with the U.S. Department of Justice and the coalition of 18 other states and the District of Columbia that worked on the case. Washington played a key role in the matter, filing suit in Snohomish County Superior Court.

In total, S/P will pay $1.4 billion to the federal government and the coalition of states. S/P will pay $687.5 million to the DOJ and another $687.5 million to the states. Washington’s share will be more than $21.5 million, one of the state’s largest ever consumer protection recoveries, which is due to the state in 30 days. The overall payment is expected to wipe out S/P’s operating profit for the year.

“To protect its own profits, S/P inflated the credit ratings of toxic, mortgage-backed assets, jeopardizing the financial future of millions of people who were invested in these securities,” Ferguson said. “My office is charged with ensuring that companies play by the rules, and this agreement, the result of nearly two years of hard-fought litigation, holds S/P accountable for its role in the financial crisis.”

Attorney General Ferguson is the former King County Council representative for Shoreline and Lake Forest Park.