Shareholders Go After Standard & Poor’s In Mortgage Debacle

WASHINGTON (CN) - Standard & Poor's gave unreasonably high ratings to bonds backed by subprime mortgages even as the market turned, and McGraw-Hill CFO Robert J. Bahash breached fiduciary duty by failing to disclose it, according to a class-action complaint in Federal Court.

Lead counsel Freeman, Wolfe & Greenbaum of Towson, Md., claims McGraw-Hill, which owns Poor's, reaped millions of dollars while over-rating the mortgage-backed securities, and misled investors by misrepresenting or failing to disclose the risk of the bonds backed by subprime loans. "Moreover, even as a downturn in the housing market caused rising delinquencies of the subprime mortgages underlying such bonds, Standard & Poor's maintained its excessively high ratings, rather than downgrade the bonds to reflect the true risk of owning subprime-mortgage-backed debt instruments," the complaint states.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit