NEW YORK (AP) - Standard & Poor's agreed on Wednesday to pay the U.S. government and two states more than $77 million to settle charges tied to its ratings of mortgage-backed securities.
In its first enforcement action against a major rating agency, the Securities and Exchange Commission accused S&P of fraudulent misconduct, saying the company loosened standards to drum up business in recent years. The agreement requires S&P to pay more than $58 million to the Securities and Exchange Commission, $12 million to New York and $7 million to Massachusetts.
"These settlements involve findings of intentional fraud in 2011 and 2012, well after the financial crisis," said Andrew Ceresney, director of the SEC's enforcement division, on a call with reporters. "The financial crisis may be behind us, but these cases are an important reminder that the race-to-the-bottom behavior exists even though the financial crisis has ended."
S&P said in a statement that it did not admit or deny any of the charges.
It's likely the first in a line of settlements between S&P and government agencies. In 2013, the Justice Department and attorneys general from other states filed civil lawsuits against the company for misrepresenting risks in the years leading up to the financial crisis.
As part of its agreement with the SEC, Standard & Poor's Ratings Services, a division of McGraw Hill Financial, will take a "time out" from rating certain types of mortgage-backed securities for a year.
"This is the first time a major credit rating agency has been subject to a time out," Ceresney said. "It's unprecedented."