S&P hires top defense attorney for $5 billion lawsuit

NEW YORK, Thu Feb 7, 2013 — Standard and Poor’s has hired John Keker, one of the country’s top white-collar defense attorneys, to help fight a $5 billion lawsuit brought by the U.S. government this week.

Keker, who is based in San Francisco and has represented everyone from cyclist Lance Armstrong to Enron’s Andrew Fastow, was hired at the recommendation of Floyd Abrams, a prominent New York attorney who also represents the ratings firm.

“John Keker is one of the great trial lawyers in this country,” Abrams said.

Keker did not return calls seeking comment. A spokeswoman for his firm, Keker & Van Nest, confirmed that Keker and another partner, Elliot Peters, were on the case.

The U.S. government sued Standard & Poor’s in federal court in Los Angeles on Monday, accusing the McGraw Hill Cos. Inc. unit of a scheme to defraud investors in mortgage-related securities that collapsed in the financial crisis.

Standard & Poor’s has said the lawsuit is “without legal merit and unjustified” and that it will “vigorously defend” itself against the erroneous claims.

S&P’s procedures under SEC review, according to report

NEW YORK – Mon Jun 25, 2012 – A last-minute decision by Standard & Poor’s Ratings Services to pull its ratings on a deal backed by commercial real estate loans is being examined by the Securities and Exchange Commission, the Wall Street Journal reported, citing employees questioned by the regulator.

The inquiry relates to the credit rating agency’s July 2011 decision to pull its ratings on a new, $1.5 billion commercial-mortgage-backed security, or CMBS, issued by Goldman Sachs Group and Citigroup.

The SEC’s scrutiny is part of its annual review of S&P and other credit rating firms, but in the rating agency’s case the regulators are examining whether S&P used more lenient standards to rate new CMBS deals than on other outstanding deals, the Journal said, citing employees. S&P has not been accused of any wrongdoing, the article added.

The SEC last year targeted S&P for a possible civil lawsuit over its ratings of a collateralized debt obligation backed by mortgage securities.

Standard & Poor is a unit of the McGraw-Hill Cos Inc.

Neither the regulator nor the rating agency could be reached for comments outside regular business hours.

S&P balks at SEC proposal to reveal rating errors

WASHINGTON ― Standard & Poor’s, whose unprecedented downgrade of U.S. debt triggered a worldwide stocks sell-off, is pushing back against a U.S. government proposal that would require credit raters to disclose “significant errors” in how they calculate their ratings.

S&P, which was accused by the Obama administration of making an error in its calculations leading to Friday’s downgrade, raised concern about the proposed new corrections policy and other issues in an 84-page letter to the Securities and Exchange Commission, dated Aug 8.

The SEC is weighing sweeping new rules designed to improve the quality of ratings after their poor performance in the financial crisis.

The 517-page proposal includes a requirement that ratings agencies post on their websites when a “significant error” is identified in their methodology for a credit rating action.

The letter was sent three days after the Treasury Department accused S&P of miscalculating ― by some $2 trillion ― the U.S. debt in the next 10 years. That calculation was in a draft press release announcing a downgrade in the government’s credit rating from AAA to AA-plus.

S&P vehemently denied it had made an error, but acknowledged that it changed its long-term economic assumptions after discussions with the Treasury Department. It switched to another economic scenario that resulted in a debt load $2 trillion smaller by 2021. But it said that did not affect its decision to downgrade the U.S. debt.S&P’s criticism of the “significant error” proposal is part of a broader concern that the SEC’s reforms prompted by the Dodd-Frank financial oversight law could give the U.S. government undue influence over its ratings decisions.

S&P in particular is facing a tense relationship with Washington. Its downgrade sparked a backlash from Administration officials and lawmakers from both sides of the aisle. A Senate Banking Committee aide on Monday said the panel has begun looking into S&P’s decision to downgrade the U.S. credit rating.