Standard & Poor’s Ratings Services is nearing a settlement with regulators over their investigation of how the company graded real-estate bonds, the Wall Street Journal reported, citing people familiar with the matter.
The proposed deal, which could be reached as early as next month, is a joint settlement with the Securities and Exchange Commission, New York Attorney General Eric Schneiderman and Massachusetts Attorney General Martha Coakley, the newspaper reported.
The settlement could involve a suspension of S&P for several months or even a year from rating some deals and a fine of at least $60 million, the Journal said.
S&P spokeswoman Catherine Mathis, representatives at the SEC, the NY AG’s office and Coakley’s office could not be reached for comment outside regular U.S. business hours.
In October, S&P’s parent McGraw Hill Financial Inc said it was in “active” settlement talks with federal and state regulators over its ratings on six commercial mortgage-backed securities and took a $60 million charge in the third quarter for a possible accord.
S&P suffered a huge blow to its commercial mortgage-backed securities business in 2011, after a major error on a $1.5 billion deal caused its market share to shrink.
It isn’t clear whether S&P will be asked to admit wrongdoing, the Journal said.
The U.S. Department of Justice sued S&P for $5 billion in February 2013, accusing it of issuing inflated ratings before the 2008 financial crisis to win more fees from issuers, and failing to downgrade debt backed by mortgage-backed securities fast enough. That lawsuit remains pending.
The rating agency also faces related lawsuits by many U.S. states. Its main U.S. rivals, Moody’s Investors Service and Fitch Ratings, do not face similar lawsuits.