The Justice Department is focusing on 25 employees at Standard and Poors Ratings Services who either wrongly put AAA ratings on unstable subprime mortgages or who took their time downgrading the securities as the mortgage market was falling apart.
Prosecutors say that a managing director failed to inform S&P analysts that other analysts were issuing warnings on the securities that would have changed the ratings to more accurately reflect the credit risks.
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David Tesher’s name is mentioned in the lawsuit against S&P 59 times. He was the managing director of one of the ratings agencies two collateralized-debt-obligation divisions. He remains at the firm, now over the department that analyses companies’ ability to pay their debts.
Five S&P executives were identified in the lawsuit as well as 17 unnamed employees identified by monikers such as “Analyst F” and “Senior Executive A.”
One internal instant message said that a security could have been put together by cows and the firm would give it a rating.
Ten employees named in the suit remain at S&P, although they now fill other roles. Regulators say it is disappointing that more than one third of employees remain at the firm who were allegedly involved in the ratings misconduct.