""Illinois Attorney General Lisa Madigan"":http://illinoisattorneygeneral.gov/pressroom/2012_01/20120125.html filed a lawsuit against Standard & Poor's (S&P) this week alleging the ratings agency inflated ratings of mortgage-backed securities (MBS) investments, an act Madigan believes triggered the financial crisis.
[IMAGE]The suit, filed in Cook County Circuit Court, relies on internal emails from within the ratings agency as evidence of the company's misrepresentations of risk.
In one correspondence in April 2007, an employee commented an investment ""could be structured by cows and we would rate it,"" according to a press release from the attorney general's office.
[COLUMN_BREAK]Madigan also references congressional testimony from a former managing director at S&P, stating ""profits were running the show.""
Prior to the mortgage crisis, ""S&P consistently misrepresented the risk of mortgage-backed securities, assigning these securities its highest seal of approval â€" or AAA rating,"" according to Madigan's office.
""Publically, S&P took every opportunity to proclaim their analyses and ratings as independent, objective and free from its desire for revenue,"" Madigan said. ""Yet privately, S&P abandoned its principles and instead used every trick possible to give deals high ratings in order to retain clients and generate revenue.""
When the investments began defaulting, pension funds and 401(k) funds were negatively impacted.
""The mortgage-backed securities that helped our market soar â€" and ultimately crash â€" could not have been purchased by most investors without S&P's seal of approval,"" Madigan said.
The S&P is reportedly denying culpability. ""The case is without merit, and we will defend ourselves vigorously,"" an S&P spokesperson told the ""_Huffington Post._"":http://www.huffingtonpost.com/2012/01/25/illinois-sues-sp-over-ra_n_1231421.html
Meanwhile, the S&P is continuing to face investigation from federal officials, who according to the ""_Wall Street Journal_"":http://online.wsj.com/article/SB10001424052970203721704577156963813900028.html have increased the vigor of their investigation of late.