WASHINGTON, March 29 The U.S. Department of
Justice opposed Standard & Poor's efforts to move a spate of
lawsuits charging the ratings agency with fraud to federal from
Standard & Poor's is seeking to move lawsuits by 15 U.S.
states and Washington, D.C. to the federal level, hoping to
limit liabilities as it defends itself against accusations of
inflating credit ratings in a bid to win fees from clients.
But the Department of Justice, in a filing in the U.S.
District Court for the District of Connecticut on Friday, said
there was no basis in law to move the cases to the higher-level.
"Based on the nature of the causes of actions alleged by the
States, and the controlling precedents, there is no
federal-question jurisdiction justifying removal," it said.
S&P parent McGraw-Hill has said that the suits
should be addressed all at once and that failure to do so could
cause "serious confusion and risk" to financial markets.
Connecticut Attorney General George Jepsen is leading a
coalition of attorneys general that brought the state cases.
These were announced on Feb. 5, the same day that the
Justice Department said it was seeking $5 billion in its own
civil lawsuit against S&P. McGraw-Hill shares lost more than a
quarter of their value during the week the suits were announced.
They closed on Thursday at $52.08 a share.
Legal experts said earlier that S&P might struggle to move
the state cases, given recent similar cases.
The lawsuits allege that S&P misled investors into believing
its ratings were objective and not tainted by conflicts of
interest. The ratings were mainly for complex fixed income
products that imploded in the financial crisis.
Moody's Corp's Moody's Investors Service and Fimalac
SA's Fitch Ratings, S&P's main rivals, were not hit
with similar federal lawsuits.