facebook
twitter
search
search

Bear Stearns clients sue rating agencies

Nov. 11, 2013 at 1:55 PM
| License Photo

NEW YORK, Nov. 11 (UPI) -- The big three U.S. credit rating firms misled investors by giving risky mortgage bonds high ratings, a lawsuit filed in New York claims.

The lawsuit was filed on behalf of Bear Stearns clients who invested in mortgage bonds sold by two Bear Stearns hedge funds.

The bonds were highly rated by Moody's Investors Service, Standard & Poor's or Fitch Ratings just before the financial crisis of 2008.

Bear Stearns collapsed in 2007 -- one of the early victims of the financial crisis.

The New York Times reported Monday that lawyers have filed a 141-page complaint that includes a significant number of emails that indicate the rating services knew they were proving high ratings for risky bonds simply because there were lucrative fees involved.

"We sold our soul to the devil for revenue," one email written by a Moody's employee says.

One written by an S&P employee calls the rating system a "scam." Another, dating in 2007, from an S&P employee says, "It could be structured by cows and we would rate it."

The Times said that the two managers of the funds, Ralph Cioffi and Matthew Tanin, were found not guilty of fraud in a civil case. In a second case, Cioffi and Tanin both settled allegations from regulators without admitting any wrongdoing.

Like Us on Facebook for more stories from UPI.com  
Related UPI Stories
Latest Headlines
Top Stories
Shoot-from-the-hip, around corner sighting capability unveiled
Bleak outlook for oil has Russian investors pulling back
Airbus Helicopters announces factory acceptance of training aircraft
Oil prices off slightly after China stock market decline
Rhode Island to get offshore wind farm