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February 8, 2013

Probe Adds to Rating Firms' Woes

New York’s top prosecutor has launched a probe into the conduct of the three major credit-ratings firms, according to a person familiar with the matter, opening another legal front for an industry that remains in the cross hairs of state and federal investigators.

New York Attorney General Eric Schneiderman this week subpoenaed Standard & Poor’s Ratings Services and formally requested information from Moody’s Investors Service and Fitch Ratings to examine ratings they issued in the run-up to the financial crisis, the person said. His office is investigating the ratings the three firms issued on mortgage-backed deals before the crisis, the person said.

“However, it isn’t clear if Mr. Schneiderman would be able to proceed with any legal action related to crisis-era ratings because of a 2008 agreement his predecessor made with the firms.

The state prosecutor’s subpoena comes amid a spate of federal and state lawsuits that hit S&P this week, and the requests to Moody’s and Fitch signal the rival firms may be drawn into the legal fury that has already enveloped their larger peer.”

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Read full Wall Street Journal article here

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