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Standard & Poor's Says Civil Lawsuit Threatened By DOJ Is Without Legal Merit And Unjustified

"Clearly, we must all do a better job identifying economic trends that could lead to future crises. For their part, governments have established new institutions to identify risks to financial stability, such as the Financial Stability Oversight Council in the U.S.  At S&P we have taken to heart lessons learned from the financial crisis and made extensive changes that reinforce the integrity, independence and performance of our ratings, including compliance with today's enhanced regulatory oversight.

"Since 2007, we have invested approximately $400 million in our systems, governance, analytics and the methodologies that we use to rate securities.  We brought in new leadership, instituted new governance and enhanced risk management.  We have taken substantive actions to:
  • Strengthen independence from issuer influence:  We have long had policies in place to manage potential conflicts of interest, including a separation of analytic and commercial activities, a ban on analysts from participating in fee negotiations, and de-linking analyst compensation from the volume of securities they rate or the type of ratings they give out. Post-crisis, we further strengthened analytical independence by rotating the analysts assigned to a particular issuer and enhancing analyst training on issuer interactions. 
  • Improve the integrity and validity of our methodologies and models:  We reassessed the principles underlying the way we rate all debt.  Based on what we learned, we changed the way we rate almost every type of security that was affected by the financial crisis including U.S. RMBS, CMBS, CDOs, banks and insurers.  For all mortgage-related securities we have significantly increased the credit enhancement required to achieve a AAA rating and have made it more difficult in general for securities to achieve high ratings.  We also strengthened our risk management including instituting a Model Validation Process independent of any commercial interests.
  • Increase analytical focus on interpreting and responding to global credit changes:  We established Credit Conditions Committees around the world to identify and monitor risks to the interconnected global credit systems across all asset classes and create a coordinated credit risk perspective across the company.
  • Enhance regulatory compliance and quality:  We significantly increased staffing in order to strengthen compliance and analytical quality, including documentation of procedures and ratings actions, and quality reviews of ratings.

"We will continue to enhance our governance, training, quality control, analytic models and investor education.  For more information about the extensive enhancements to our business – both completed and ongoing – please go to

"It is also important to note that credit rating agencies became regulated in the United States in the fall of 2007 with the enactment of the Credit Rating Agency Reform Act, and the Dodd-Frank Act of 2010 which further strengthened accountability, transparency and oversight for credit rating agencies.  We are now also regulated in Europe, Japan, Australia and other countries.

"S&P currently issues ratings on more than $45 trillion in debt globally across all asset classes issued by companies, financial institutions, countries, state and local governments and others.  We will not be distracted from our core mission.  As always, we are committed to providing investors and the markets with the highest-quality ratings available and the tools to navigate an increasingly complex global financial marketplace."

About Standard & Poor's Ratings Services:  Standard & Poor's Ratings Services, part of The McGraw-Hill Companies (NYSE: MHP), is the world's leading provider of independent credit risk research and benchmarks. We publish credit ratings on debt issued by sovereign, municipal, corporate and financial sector entities. With over 1,400 credit analysts in 23 countries, and more than 150 years' experience of assessing credit risk, we offer a unique combination of global coverage and local insight. Our research and opinions about relative credit risk provide market participants with information and independent benchmarks that help to support the growth of transparent, liquid debt markets worldwide.

Additional information is available at

Investor Relations:

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Release issued:  February 4, 2013

Contact: Catherine Mathis Senior Vice President, Marketing & Communications (212) 512-2578

Chip Merritt Vice President, Investor Relations (212) 512-4321


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