Moody's Says Justice Department Preparing Complaint
October 21 2016 - 10:10AM
Dow Jones News
Moody's Corp. said Friday the U.S. Justice Department is
readying a complaint against the firm for ratings it issued just
before the 2008 financial crisis.
The company said it received a letter late last month in which
the Justice Department said it is preparing a civil complaint to be
filed against Moody's alleging violations in connection with
ratings it assigned to "residential mortgage-backed securities and
collateralized debt obligations in the period leading up to the
2008 financial crisis."
The Justice Department may expand its continuing investigation
to include "additional theories," Moody's said, adding that the
attorneys general of "a number" of states have indicated that they
also expect to pursue similar claims under state law.
The Justice Department couldn't be reached for comment.
The news comes as the ratings firm boosted its earnings outlook
for the year on better-than-expected profit in the
third-quarter.
The New York-based company, the world's second-biggest ratings
firm behind Standard & Poor's, relies on activity in global
credit markets as corporations and lenders pay firms like Moody's
to rate the debt they issue. The company had expected activity to
pick up in the second half of the year following a rocky first
half.
Raymond McDaniel, Moody's chief executive, pointed to record
third-quarter revenue from Moody's Investors Service, driven by
"higher leveraged finance issuance and U.S. public finance
activity, as well as solid growth from Moody's Analytics."
The company now expects adjusted earnings for the year to range
between $4.62 and $4.72 a share, up from its prior outlook of $4.55
and $4.65.
Over all, Moody's posted a profit of $255.3 million, up from
year-earlier earnings of $231.6 million. On a per-share basis, the
company posted $1.31 a share, up from $1.14 a share. Excluding
restructuring costs, adjusted earnings were $1.34, up from $1.11.
Analysts expected $1.20, according to Thomson Reuters.
Revenue climbed 9.8% to $917.1 million, as analysts expected
$895.1 million.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 21, 2016 09:55 ET (13:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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