The United States government’s lawsuit against Standard & Poor’s proves that there is still life in the effort to hold financial institutions responsible for the financial crisis, for at least a little while longer. According to Dealbook three aspects of the suit are particularly interesting.
The first relates to the government’s insistence on an admission of guilt from S.&P. Such admissions are costly to extract, and often viewed as unnecessary – ordinary people do not admit guilt when they get divorced, or pay up after auto accidents, after all, even where the fault is clear.
Perhaps for this reason, the Securities and Exchange Commission has not required such admissions in the past, much to the consternation of some observers, and at least one judge. Jed S. Rakoff of Federal District Court in Manhattan reacted with horror to the S.E.C.’s nonadmission settlements with Citigroup and Merrill Lynch over wrongdoing related to the financial crisis.
The S.&P. suit shows that at least part of the government has come around to Judge Rakoff’s way of thinking. If so, we should expect to see fewer settlements and more court cases in the future….
More? Check out the coverage in http://dealbook.nytimes.com/2013/02/11/s-p-lawsuit-draws-new-line-in-the-sand/