REPORT: The Justice Department May Sue Moody's For Fraud Too

Moody's Rating

Photo: AP/Mark Lennihan

Reuters is reporting that the U.S. Department of Justice is considering bringing a lawsuit against Moody’s for fraud.This comes hot on the heels of a DoJ lawsuit filed Monday against another credit rating agency, Standard & Poors, for transgressions related to the financial crisis in 2008.

Reuters reporters Aruna Viswanatha and Luciana Lopez have the scoop:

The Justice Department and multiple states are discussing also suing Moody’s Corp for defrauding investors, according to people familiar with the matter, but any such move will likely wait until a similar lawsuit against rival Standard and Poor’s is tested in the courts.

Inquiries into Moody’s are in the early stages, largely because state and federal authorities have dedicated more resources to the S&P lawsuit, said the sources, who were not authorised to speak publicly about enforcement discussions.

The stock is only down a little more than 2 per cent in after-hours trading. However, it’s already taken a brutal beating this week – down more than 17 per cent since the lawsuit against S&P was filed on Monday.

“Don’t think Moody’s is off the hook,” a law enforcement official told Reuters.

The sources also told Reuters that Fitch probably won’t be subjected to a lawsuit like S&P and Moody’s.

Click here to read the whole Reuters report >

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