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Pa. joins lawsuit challenging Standard & Poor's ratings business - abc27 WHTM

Pa. joins lawsuit challenging Standard & Poor's ratings business

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HARRISBURG, Pa. (WHTM) -

On Tuesday Pennsylvania Attorney General Kathleen Kane joined a federal lawsuit against credit rating agency Standard & Poor's LLC.

The lawsuit accuses S&P of business misconduct founded in financial greed.

For example, the Commonwealth says that S&P altered its rating methodologies in order to win over clients, thereby misrepresenting the reliability of its credit ratings.

S&P, according to the complaint, adjusted its analytical model because it wanted to improve its ratings.

"Countless investors and market participants were misled by S&P's promise that its analysis was independent and objective," said Kane. "We believe S&P violated the trust that it purposefully cultivated with the marketplace, leading to disastrous results."

The lawsuit seeks court orders compelling the company to comply with the Unfair Trade Practices and Consumer Protection Law, which S&P allegedly violated. It also seeks civil penalties.

Connecticut was the first state to sue S&P in March of 2010. Its lawsuit is currently pending in Hartford Superior Court.  The States of Mississippi and Illinois filed lawsuits against S&P in 2011 and 2012, respectively.
 
Pennsylvania joins Arizona, Arkansas, California, Colorado, Delaware, Washington D.C., Idaho, Iowa, Maine, Missouri, North Carolina, Tennessee and Washington.

The complaints also allege that S&P delayed taking rating actions because it wanted to continue to be paid.

The Financial Crisis Inquiry Commission concluded in its final report that the financial crisis "could not have happened" without ratings agencies such as S&P.

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