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February 11, 2013

Two Firms, One Trail In Probes Of Ratings

The Justice Department last week went after Standard & Poor’s Ratings Services—not rival Moody’s Investors Service —with a $5 billion fraud lawsuit. Some former Moody’s employees think they know why.

The Moody’s Corp. unit took careful steps to avoid creating a trove of potentially embarrassing employee messages like those that came back to haunt S&P in the U.S.’s lawsuit, the former employees say.

Moody’s analysts in recent years had limited access to instant-message programs and were directed by executives to discuss sensitive matters face to face, according to former employees. The crackdown on communications came after a 2005 investigation by then New York Attorney General Eliot Spitzer into Moody’s ratings on some mortgage-backed deals, the former employees say.”

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Read full Wall Street Journal article here

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