Northern, WI 02/07/2013 (wallstreetpr) – Arthur Levitt, former chairman of the Securities and Exchange Commission has said that McGraw-Hill, Inc. (NYSE:MHP) and its Standard & Poor 500’s unit are most likely to lose in the lawsuit filed by the US Justice Department.
“The government is going to win” and it was “foolish” of McGraw-Hill not to have opted for a “settlement”, he said.
The U.S. Justice Department has accused S&P of understating the risks underlying the issue of bonds backed by mortgages made to risky borrowers. This, the department has said, has been done in order to win business. S&P is said to have rated about $1.2 trillion of asset backed securities and $2.8 trillion of mortgage-backed securities in three years from 2004 to 2007.
The U.S. is seeking $5 billion from the company. However, Levitt has said that if any settlement takes place, the amount will be substantial but reduced. The penalties during such cases are imposed based on losses suffered by the federally insured institutions.
Floyd Abrams, the legal counsel of McGraw-Hill, Inc. (NYSE:MHP) has said that the company has been in extensive talks with the U.S. government over the accusation since the past few months. It was forced to engage in a settlement dialogue, after the government sought $1 billion as fine and an S&P’s confession that it had indulged in fraud.
New York-based McGraw-Hill, Inc. (NYSE:MHP) did not comment on these predictions. Ever since the company has publicly declared that it had expected the lawsuit, its shares fell 24%.
The shares of McGraw-Hill Companies, Inc. (NYSE:MHP) declined by 0.96% and currently trading at $44.16
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