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S&P to pay $1.4bn to regulators in sub-prime debt case S&P to pay $1.4bn to regulators in sub-prime debt case
(35 minutes later)
Credit rating agency Standard & Poor's (S&P) has agreed to pay a $1.38bn settlement to US regulators over allegations it knowingly inflated its ratings of risky mortgage investments. Ratings agency Standard & Poor's (S&P) is to pay a $1.38bn (£934m) settlement to US regulators over allegations it knowingly inflated its ratings of risky mortgage bonds.
The deal with the US Justice Department covers mortgage bond ratings issued between 2004 and 2007. The deal with the US Justice Department also resolves 19 other lawsuits.
The inflated ratings were blamed for the collapse of the US property market and subsequent global financial crisis. It covers mortgage bond ratings between 2004 and 2007.
The deal also resolves lawsuits filed by 19 US states. The bonds, which included sub-prime mortgages, were blamed for the collapse of the US property market and subsequent global financial crisis.
The US Justice Department filed civil fraud charges against S&P two years ago.
It accused the credit rating firm of giving top recommendations - known as triple-A ratings - to mortgage bonds that it knew contained sub-prime mortgage debt and were therefore not as safe an investment as the rating suggested.
The US government said that S&P's ratings encouraged financial institutions around the world to buy and sell what proved to be "toxic" financial products in their trillions.
It also accused S&P of failing to warn investors that the housing market was collapsing in 2006 because doing so would have hurt its business.
At the time, S&P said the US government's case was entirely without factual or legal merit.
S&P will pay $687.5m to the Justice Department and a further $678.5m to the 19 states that had brought lawsuits against it.
S&P will also pay $125m in a separate settlement with the California Public Employees' Retirement System.