McGraw Hill Financial Inc.’s Standard & Poor’s said that it would be unfair to let the U.S. Justice Department put more than 150 selected securities before a jury to argue at the firm’s ratings were the result of fraud, Bloomberg News reported today. S&P’s lawyer, John Keker, said at a hearing yesterday in federal court that if the case goes to trial, the company would want to show on a security-by-security basis that its credit rating was fair and equal to its competitor, Moody’s Corp. The Justice Department is seeking as much as $5 billion in civil penalties for losses to federally insured financial institutions that relied on S&P’s investment-grade ratings for mortgage-backed securities and collateralized debt obligations. U.S. District Judge David Carter said that he has tentatively decided that the government complied with his earlier request to narrow the case. The U.S. identified 56 residential mortgage-backed securities and 107 CDOs that it will use at trial to try to prove S&P lied about its ratings being free of conflicts of interest.
