State prosecutors may also sign onto the case that would be the first charging a credit rating agency with illegal actions that allegedly contributed to the housing market collapse that undermined the financial system in 2008, leading to a financial crisis and a nearly global economic downturn.
The Journal reported Monday the case is likely to be filed this week and will center on the model the rating agency used to evaluate mortgage bonds.
The basic model includes banks that bundle mortgage securities paying the ratings agencies for their services. As such, there is a built-in system that provides economic incentive for ratings firms to judge the securities as good investments.
The ratings firms, theoretically the watchdogs of the financial system, have been criticized for failing to predict the housing market collapse.
The federal Financial Crisis Inquiry Commission that was charged with finding the causes of the economic downturn called the ratings agencies "key enablers of the financial meltdown."
The rating agencies have traditionally argued, with long-standing success in the judicial system, that their conclusions are opinions protected by the First Amendment.
A federal judge in New York, however, refused to accept that argument last year, sending a case filed by Abu Dhabi Commercial Bank against S&P and Moody's Investors Service to trial. That trial is scheduled to begin in May, the Journal reported.