The mortgage crisis that devastated the Arizona economy was made far worse because of misleading financial claims made by Standard & Poor's, according to a lawsuit filed Tuesday.
Arizona Attorney General Tom Horne joined federal and state enforcers in filing actions against Standard and Poor's for alleged misconduct involving structured finance securities backed by subprime mortgages that were at the heart of the nation's financial crisis.
Arizona is suing under the Arizona Consumer Fraud Act.
"Arizona is one of the states that was hit hardest in the mortgage crisis, and this lawsuit alleges that Standard & Poor's played a key role in making that crisis even worse," Horne said.
Horne said the losses to the Arizona economy are unknown but could be in the hundreds of millions of dollars.
"The evidence will show that S&P issued inflated ratings they knew were false and as a result, Arizona's economy was substantially harmed," Horne added.
The complaint alleges that despite S&P's repeated statements emphasizing its independence and objectivity, S&P allowed its analysis to be influenced by its desire to earn lucrative fees from its investment bank clients, and knowingly assigned inflated credit ratings to toxic assets packaged and sold by the Wall Street investment banks, according to the attorney general's news release.
The alleged misconduct began as early as 2001, became particularly acute between 2004 and 2007, and continued as recently as 2011.
The enforcement action seeks a court order to stop S&P from making misrepresentations to the public; to change the way the company does business, and to obtain awards for civil penalties, as well as attorneys' fees and costs.
The complaint was filed in Maricopa County Superior Court.
Other states taking action on Tuesday were Arkansas, California, Delaware, the District of Columbia, Idaho, Iowa, North Carolina, Maine, Missouri, Pennsylvania, Tennessee and Washington.
Copyright 2013 CBS 5 (KPHO Broadcasting Corporation). All rights reserved.
Monday, May 20 2013 7:06 AM EDT2013-05-20 11:06:35 GMT
The Henderson fire department was able to put out a brush fire Sunday night near Sunset Blvd. and Arroyo Grande, that's within the Whitney Ranch Recreation Area. The fire started with a palm tree on fire,More >
The Henderson Fire Department was able to put out a brush fire Sunday night near Sunset Boulevard and Arroyo Grande within the Whitney Ranch recreation area.More >
Sunday, May 19 2013 2:25 PM EDT2013-05-19 18:25:51 GMT
Nevada Highway Patrol is investigating a deadly crash on the I-15 near the Speedway. Three people are confirmed dead. The accident occurred around 4:30 a.m. Sunday when calls of gold Acura traveling northboundMore >
Nevada Highway Patrol is investigating a deadly crash on the I-15 near the Speedway. Three people are confirmed dead.More >
Friday, May 17 2013 7:16 PM EDT2013-05-17 23:16:53 GMT
One person has died in a crash near Harrisonville, MO, Thursday evening. The crash happened on Missouri Highway 7 and Walker Road. It involved a car and a tractor-trailer. Harrisonville is in Cass County.More >
Savannah Nash celebrated her 16th birthday last week. She died Thursday when her car slammed into a semi while she was texting during her first time driving by herself.More >
Thursday, February 21 2013 3:40 PM EST2013-02-21 20:40:03 GMT
A woman arrested Tuesday was seen engaging in sexual acts with a pit bull while outside in a backyard and in view of neighbors, Las Vegas Metro police said. Metro Wednesday released the report describingMore >
A Las Vegas woman was arrested Tuesday after authorities caught her having sex with a pit bull in her back yard, according to Metro police.More >
Sunday, May 19 2013 4:15 PM EDT2013-05-19 20:15:03 GMT
The McCarran Airport was having issues with their trams operating on Sunday morning resulting in some trams not working properly. McCarran Airport officials noticed there was an electrical failure atMore >
The McCarran Airport is having issue with their trams operating on Sunday morning and a result some trams are not operating.More >
Saturday, May 18 2013 6:29 PM EDT2013-05-18 22:29:17 GMT
Family friends and classmates were distraught and angry at a candlelight vigil on Friday night for a 15-year-old who was killed over his iPad. Marcos Arenas died Thursday night when two male suspectsMore >
Family, friends and classmates were distraught and angry at a candlelight vigil on Friday night for a 15-year-old who was killed over his iPad.More >