Standard & Poor’s (S&P) has struck a USD 80 million settlement agreement with the US Securities and Exchange Commission (SEC) and the attorneys-general in Massachusetts and New York under which the rating agency has agreed to suspend from rating certain commercial mortgage bonds for a year.
According to the sources familiar with the matter, the official announcement over the agreement is scheduled to come on Wednesday.
S&P along with Wall Street have long been blamed for engaging in risky activities leading to the 2008 financial crisis in the United States.
The market analysts said this will be the toughest penalty awarded to any agency in the ratings industry.
The analysts further said that the settlement deal with the attorneys-general and the SEC focuses on whether the rating agency relaxed its standards for six commercial securities backed by mortgage issued in 2011 to gain business.
The SEC settlement agreement will involve a USD 60 million penalty. The office of New York attorney-general Eric Schneiderman will be imposing a USD 12 million fine while the office of Massachusetts attorney-general will slap a USD 8 million penalty.
The major rating agency S&P will also be banned from rating for a year the pooled mortgage securities backed by commercial properties, which is among the most lucrative parts of the market.
According to the market watchers, the settlements would offer solution to most of the legal and regulatory tussles that S&P has been facing for long.
Meanwhile, the S&P declined to make any comment on the development.