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US Justice Department suspects Moody’s of violating ratings rules — media

February 02, 2015, 9:43 UTC+3 NEW YORK
The agency is suspected of assigning favorable ratings on risky mortgage bonds before the 2008 global financial crisis
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© EPA/ANDREW GOMBERT

NEW YORK, February 2. /TASS/. The US Justice Department has launched an investigation against Moody’s ratings agency into the suspected issuing of favorable ratings on mortgage bonds before the 2008 global financial crisis, the Wall Street Journal reports.

Over the past several months, the Justice Department officials have met with a number of former executives of Moody’s Investors Service to clarify the mechanism of issuing ratings on mortgage deals, according to the report.

The Justice Department lawyers are in particular interested whether the "firm compromised standards to win business," report says, referring to people familiar with the matter.

It is yet unclear whether the investigation, which is in the early stages, will result in a lawsuit.

In February 2013, the US Justice Department filed a lawsuit against another leading ratings agency, Standard & Poor's, accusing it of having deliberately inflated grades of risky mortgage securities.

The Wall Street Journal reports that the sides have reached an agreement under which S&P will pay more than $1.37 billion in settlement.

Guided by positive assessments of the top ratings agencies - Standard & Poor's, Moody’s and Fitch, many investors bought mortgage-related securities and later suffered huge losses when the mortgage market collapsed.

Many experts believe that the collapse of the mortgage market led to the beginning of the global financial crisis.

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