Ratings agency Standard
& Poor's (S&P) is to pay a $1.38bn (£934m) settlement to US
regulators over allegations it knowingly inflated its ratings of risky
mortgage bonds.
The deal with the US Justice Department also resolves 19 other lawsuits.
It covers mortgage bond ratings between 2004 and 2007.
The bonds, which included sub-prime mortgages, were blamed
for the collapse of the US property market and subsequent global
financial crisis.
The US Justice Department filed civil fraud charges against S&P two years ago.
It accused the credit rating firm of giving top
recommendations - known as triple-A ratings - to mortgage bonds that it
knew contained sub-prime mortgage debt and were therefore not as safe an
investment as the rating suggested.
The US government said that S&P's ratings encouraged
financial institutions around the world to buy and sell what proved to
be "toxic" financial products in their trillions.
It also accused S&P of failing to warn investors that the
housing market was collapsing in 2006 because doing so would have hurt
its business.
At the time, S&P said the US government's case was entirely without factual or legal merit.
S&P will pay $687.5m to the Justice Department and a further $678.5m to the 19 states that had brought lawsuits against it.
S&P will also pay $125m in a separate settlement with the California Public Employees' Retirement System.
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