S&P to pay $1.4 billion settlement to end probe stemming from ’08 recession

One of the world’s biggest credit rating agencies has agreed to pay United States prosecutors nearly $1.4 billion to settle claims it defrauded investors ahead of the 2008 financial crisis.

Under the terms of the settlement acknowledged on Tuesday this week, Wall Street giant Standard & Poor’s will pay a total of $1.375 billion in order to settle allegations that it knowingly defrauded investors by manipulating interest rates ahead of the 2008 financial crisis.

S&P’s parent company, McGraw Hill Financial Inc., said in a statement that the agreement consists of two major payments: $687.5 million to the US Department of Justice, and $687.5 million to 19 states and the District of Columbia, settling federal and regional lawsuits filed over the recession.

“After careful consideration, the company determined that entering into the settlement agreement is in the best interests of the company and its shareholders and is pleased to resolve these matters,” reads the statement in part.

The arrangement, S&P said, “contains no findings of violations of law,” ending for now a lawsuit launched almost exactly two years earlier by the Justice Department, in which federal prosecutors alleged the firm “engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs).”