Related Attorney: Michael Blumenfeld
On Tuesday, February 3, Standard & Poor’s Financial Services LLC agreed to pay $1.375 billion to settle lawsuits brought by the U.S. Department of Justice and 20 attorneys general over ratings that helped ignite the financial crisis. Mr. Blumenfeld responded with the following opinion.
“One methodology employed by a number of the nation’s largest broker-dealer firms was to create their own proprietary investment vehicles that were heavily invested in subprime real estate and to acquire S&P ratings thereon, in order to lend legitimacy to the investments and to thereby attract more investors. In rating these investments, it would have been readily apparent to S&P that the heavy emphasis on subprime was fraught with risk. This is a very significant enforcement action that holds the rating agency liable for the inevitable harm suffered by investors in direct reliance upon the S&P endorsement.”
The article including Mr. Blumenfeld’s quote was published in four Law360 daily sections of coverage, which are sent out to 100,000 daily recipients. Half of the recipients are corporate counsel.
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