Colorado collects $21.5M from S&P in financial crisis settlement
Colorado will receive $21.5 million from Standard & Poor's as part of a nation-wide settlement over the rating agency's practices.
S&P's parent company McGraw Hill Financial will pay $1.38 billion to settle charges that it over-rated subprime mortgage-backed securities in the run up to the financial crisis. Colorado was one of 18 states that joined with the District of Columbia and the Department of Justice to sue S&P.
“Our lawsuit alleged that S&P put profit before the economic best interest of our country by claiming its ratings were objective when in fact they were not,” Colorado Attorney General Cynthia Coffman said in a statement on Tuesday.
Coffman said she will now explore how to best use Colorado's settlement money.
The deal "contains no findings of violations of law," McGraw Hill points out in a statement released Tuesday morning. The settlements are not subject to a court's approval.
The news comes nearly two years after the Justice Department sued Standard & Poor's, "alleging that S&P engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs)."
In 2013, the agency said S&P's desire to grow its own profits led it to give a false impression of complex securities that were a key element of the recent U.S. mortgage crisis.
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