LITTLE ROCK, Ark. (AP) -- The Arkansas attorney general's office is suing credit rating agency Standard & Poor's over the way it issued ratings during the financial crisis.
The court action filed Tuesday alleges that S&P deliberately misled investors by giving inflated ratings to securities backed by subprime mortgages.
The lawsuit filed by Attorney General Dustin McDaniel accuses S&P of allowing its analysts to be influenced by lucrative fees generated by investment banks that were S&P clients.
The value of residential mortgage-backed securities and collateral debt obligations are based on monthly mortgage payments made by consumers.
The federal government is also pursuing $5 billion in penalties against S&P. In responding to that suit, S&P said its ratings reflected its best judgment.
McDaniel alleges S&P violated the Arkansas Deceptive Trade Practices Act.
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