Moody's Investors Service (MCO) is under investigation by the U.S. Justice Department for its actions in advance of the 2008 financial crisis, the Wall Street Journal reported on Sunday, with regulators probing why it issued favorable ratings to mortgage deals that ultimately went bust.
Citing people familiar with the investigation, The Journal said DoJ officials have quietly met with numerous former executives of Moody's to discuss the agency's grading of key securities before the crisis. The investigation is in its early stages, and may not yield a lawsuit, the newspaper said, citing unnamed sources.
Still, the DoJ has already targeted Standard & Poor's Ratings, as well as major banks, for their role in the crisis. According to reports, Justice officials are close to a settlement with S&P.
Justice representatives have looked at internal company emails, and pressed Moody's former brass on whether the agency relaxed its standards in order to win business, The Journal reported. The deals under scrutiny involve residential mortgage deals from 2004-2007, the publication added.
A spokesman for Moody's declined to comment to the WSJ.
The entire story can be found on the WSJ's website (subscription required).