Connecticut will receive $36 million of a $1.4 billion multistate settlement with Standard & Poor's over allegations that S&P misled investors, state Attorney General George Jepsen announced.
Jepsen said the amount will go toward the state's general fund. The plaintiff states shared the amount equally. Jepsen joined U.S. Attorney General Eric Holder at the Department of Justice for the announcement on Tuesday.
State Treasurer Denise Nappier called the settlement "a major victory for the investing public, and affirms that companies involved in the financial crisis should be held accountable."
The lawsuit, which Connecticut filed in 2010 and included 18 states and the U.S. Department of Justice as plaintiffs, accused S&P of knowingly assigning inflated credit ratings to toxic assets packaged and sold by Wall Street investment banks, and letting the desire to earn lucrative fees compromise its objectivity.
The suit alleged that the misconduct began as early as 2001 and became particularly acute between 2004 and 2007, shortly before the financial meltdown.
Structured finance securities backed by subprime mortgages were at the center of the 2008 financial crisis. These financial products, including residential mortgage-backed securities and collateralized debt obligations, derive their value from the monthly payments consumers make on their mortgages.
"As a result of this important case, we expect that there will be careful compliance with state and federal laws designed to better protect institutional and individual investors, as well as our community at large -- especially the small businesses and the most vulnerable individuals who bear the brunt of financial hardship," Nappier said in a statement.
According to a statement issued by S&P's parent, McGraw-Hill Financial Inc., the settlement contains no findings of violations of law by the company, S&P Financial Services or S&P Ratings.
