U.S. Attorney General Eric Holder is accusing
the nation's largest credit-rating agency, Standard and Poor's
, of lying to investors about the quality of complex investments that played a key role in the financial crisis. He said the fraud cost investors billions of dollars, and has filed a lawsuit against the firm.
The securities were bundles of mortgage loans that turned out to be far riskier than their top-level ratings indicated. A commission investigating the crisis said rating agencies were "key enablers" of the financial meltdown.
S&P told investors that it would give them an objective evaluation of the securities. Holder said S&P instead gave top ratings to investments it knew were bad because the rating agency was paid by the companies issuing the securities.
On its company website, S&P says
its ratings were issued in "good faith" and not motivated by "commercial considerations."
S&P officials say the suit has no legal merit.
The lawsuit was filed late Monday, and is the first significant federal action against rating agencies, which made substantial profits issuing evaluations of the risk of securities.