Attorney General helps state recover $31.5 million from Moody’s

George Jepsen

George Jepsen

Attorney General George Jepsen announced last week that Connecticut, the U.S. Department of Justice, 20 other states, and the District of Columbia have reached a settlement agreement with Moody’s Corp., Moody’s Investor Services Inc. and Moody’s Analytics Inc. resolving allegations that the credit rating agency misled investors when it rated structured finance securities in the lead-up to the 2008 financial crisis.

The settlement culminates a seven-year effort led by Connecticut to hold Moody’s responsible for its role in the 2008 financial crisis.

The settlement requires Moody’s to pay $863,791,823 to the states and the Department of Justice. The settlement amount will be split equally among the states and the Department of Justice. Connecticut was the first state to sue Moody’s in 2010 and will receive $31,519,461 in the settlement, which will go to the state’s general fund.

“We alleged that Moody’s ratings of structured finance securities, including mortgage-backed securities, were directly influenced by the demands of the powerful investment banking clients who issued the securities and paid Moody’s to rate them,” said Jepsen. “Moody’s considered its own business interests, contrary to its public statements that its ratings were objective, and the results to our state and national economy were dramatic and devastating. I am especially proud that it was the Connecticut Office of the Attorney General that developed the unique legal theory that proved foundational in both this case and the similar case against Standard & Poor’s that we settled last year. We would not have been able to achieve such a significant result if not for the strong partnership among the Department of Justice and our fellow states, and I’m grateful for their efforts on this case.”

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