No friend of Egypt's economy: S&P versus US in mortgage ratings trial
Standard and Poors, which downgraded Egypt's economic outlook recently, is facing legal action in the US over the subprime financial crisis
Standard and Poor's has said it expects to be sued by the US government over its assessment of mortgage bond ratings before the financial crisis.
The agency said that the civil lawsuit would focus on S and P's high ratings in 2007 for some mortgage-backed securities that later collapsed in value.
It also said that the case is entirely without factual or legal merit, the BBC reports.
The suit would be the first such case over alleged wrongdoing by a ratings agency tied to the financial crisis.
According to the report, S and P said the justice department had informed them of the impending civil suit, although the federal agency declined to comment.
S and P and other agencies have been criticised by investors, politicians and regulators for assigning their top AAA ratings to thousands of subprime and other mortgage securities that later collapsed in value.
Such agencies are paid by the issuers of bonds and other securities for ratings, raising concern about potential conflicts of interest.
Grades assigned by these firms can affect a company's ability to raise or borrow money as well as how much investors will pay for their securities.
- Will terror attacks damper Arabs' appetite for European holidays?
- So cool it's hot: Saudi Arabia's $3.2B HVACR market driven by construction boom
- US, EU protectionist policies may be a blessing in disguise for GCC suppliers
- Dubai to Doha: How far can you stretch your dirham?
- OPEC's poor history of compliance will make production cut deal a challenge