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S&P Settlement Yields Maine More Than $21.5 Million

AUGUSTA, Maine - Maine is receiving more than $21.5 million as part of a $1.375 billion multi-state settlement of a lawsuit against credit ratings agency Standard and Poor's. Maine Attorney General Janet Mills says it's the largest one-time settlement in Maine history.
 
The lawsuit, originally filed two years ago in Kennebec County Superior Court, alleged that S&P gave some risky investments high ratings in order to earn lucrative fees from investment bank clients during the time leading up to the financial crisis of 2008.

"Holding S&P accountable for these practices tells Wall Street we will not tolerate acts that deceive investors and devastate our economy," Mills says, in a statement. "This settlement shows that banks did not act alone and that the Attorneys General of the states and of the United States together will pursue any entity that violates the public trust and stacks the deck against consumers and homeowners."

S&P did not fully disclose to the investing public that it had a financial interest in giving some investments high ratings, the suit alleged. While touting its ratings to investors as "independent and objective," the company was actually being paid for those ratings by firms that were issuing the complex investments, which included residential mortgage back securities and credit default options, Mills says.

The practice ultimately led to the proliferation of low quality mortgages and the housing bubble and subsequent crash, leading to massive losses by investors who bought the S&P-rated products.

Mills says Maine's share of the settlement will be used for consumer protection and education efforts.