NEW YORK • Moody's Corp has agreed to pay nearly US$864 million (S$1.23 billion) to settle with US federal and state authorities over its ratings of risky mortgage securities in the run-up to the 2008 financial crisis, according to the US Department of Justice.
The credit rating agency reached the deal with the Justice Department, 21 states and the District of Columbia, resolving allegations that the firm contributed to the worst financial crisis since the Great Depression, the department said in a statement last Friday.
"Moody's failed to adhere to its own credit-rating standards and fell short on its pledge of transparency in the run-up to the Great Recession," Principal Deputy Associate Attorney-General Bill Baer said in the statement.
S&P Global's Standard & Poor's entered into a similar accord in 2015, paying out US$1.38 billion. Standard & Poor's is the world's largest ratings firm, followed by Moody's.
Moody's said that it would pay a US$437.5 million penalty to the Justice Department, and the remaining amount would be split among the states and Washington, DC.
As part of its settlement, Moody's also agreed to measures designed to ensure the integrity of credit ratings going forward.