CHICAGO, Jan. 25 (UPI) -- Illinois sued Standard & Poor's Wednesday, alleging it fueled the housing market crash with its unwarranted high ratings to risky mortgage-backed investments.
In a lawsuit filed in Cook County Circuit Court, state Attorney General Lisa Madigan alleges S&P compromised its independence as a ratings agency by assigning high ratings to unworthy, risky investments as a corporate strategy to increase its revenue and market share.
In a release posted on the attorney general's Web site, Madigan alleges S&P shrugged off the increasing risks posed by mortgage-backed securities and gave the investment pools ratings that were favorable to its investment bank clients and S&P's profits.
"Publicly, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue," Madigan said. "Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue. The mortgage-backed securities that helped our market soar -- and ultimately crash -- could not have been purchased by most investors without S&P's seal of approval."
The lawsuit cites internal e-mails and conversations among S&P employees in the run-up to the housing market's collapse as evidence the company misrepresented its ratings as objective and independent.
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