$1.375 Billion State-Federal Settlement Reached with Standard & Poor’sTue, Feb 3, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge announced today that Arkansas, the U.S. Department of Justice and a coalition of 18 other states and the District of Columbia have reached a settlement agreement with Standard & Poor’s Financial Services LLC (S&P) resolving allegations that S&P misled investors when it rated structured finance securities in the lead-up to the 2008 financial crisis. Rutledge released the following statement:
“Today, I am pleased to announce that after years of hard work and litigation, S&P is finally being held accountable for its role in the 2008 financial crisis. Arkansas consumers expect, and are entitled to, an impartial independent analysis of securities from credit-rating agencies. Unfortunately, for many years, S&P placed profit above people. But thanks to the work of this partnership between the States and the Department of Justice, we are demonstrating that no company, no matter its size, can circumvent the law.”
Arkansas will receive $21.5 million from the settlement.
In early 2013, Arkansas joined the U.S. Department of Justice, the District of Columbia and 18 other states in suit against S&P. The federal and state complaints against S&P alleged that, despite S&P's repeated statements emphasizing its independence and objectivity, the credit rating agency allowed its analysis to be influenced by its desire to earn lucrative fees from investment bank clients – while investors and other market participants, including state regulators, relied on S&P's promises of independence and objectivity. The complaints alleged that the agency knowingly assigned inflated credit ratings to toxic assets packaged and sold by the Wall Street investment banks. The alleged misconduct began as early as 2001 and became particularly severe between 2004 and 2007. As evidenced by the SEC’s recent suspension of S&P’s license to rate certain mortgage backed securities, the misconduct continued into 2011.
Structured finance securities backed by subprime mortgages were at the center of the financial crisis. These financial products, including residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS) and collateral debt obligations (CDOs), derive their value from the monthly mortgage payments made by homeowners.
In addition to the financial settlement, S&P has agreed to a statement of facts acknowledging conduct related to its analysis of structured finance securities. S&P will also comply with all applicable state laws, including the Arkansas Deceptive Trade Practices Act, and for five years will cooperate with any request for information from any state expressing concern over a possible violation of state law.
Arkansas filed a consumer protection lawsuit in Pulaski County Circuit Court on Feb. 5, 2014, against S&P alleging that the credit rating agency intentionally misled investors in the way it rated the toxic assets at the heart of the nation's financial crisis. The Attorney General’s pending suit against S&P will be resolved by the filing of a consent judgment which will include the terms of this settlement agreement.
In addition to Arkansas, the states involved in today's settlement include Arizona, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Maine, Mississippi, Missouri, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee and Washington as well as the District of Columbia.
Judge Sides with the State, Orders Credit-Repair Agency to Cease OperationFri, Jan 30, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge announced today that Pulaski County Circuit Judge Chris Piazza has granted the Attorney General’s Office petition to enforce a civil investigative demand against a Texas company, known as CMCS Services, operating in Arkansas. Rutledge released the following statement:
“Con artists, like CMCS Services, are using flashy signs and slogans to take advantage of Arkansans by promising quick fixes to their credit score if they hand over hundreds of dollars in advance. These ads are misleading because there is no easy or quick way to repair a negative credit history. I am pleased that Judge Piazza has granted the State’s petition and that CMCS Services will not be operating in Arkansas as they had been.”
CMCS Services was involved in credit repair services in violation of the Arkansas Deceptive Trade Practices Act and the federal Credit Repair Organizations Act. Judge Piazza granted an injunction and the business is prohibited from doing business in Arkansas until the company complies with the court order.
Consumers should beware of any credit-repair agency that requests an upfront fee. Arkansans looking to obtain an accurate and free copy of their credit report can visit www.annualcreditreport.com.
Rutledge Announces Warren Man Sentenced for Adult AbuseMon, Jan 26, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge announced today that a Bradley County man has been sentenced to five years in the Arkansas Department of Correction, with three years suspended, on one count of adult abuse and one count of criminal use of property. Rutledge released the following statement:
"As your Attorney General, I will not stand for individuals who abuse or neglect those living in any of Arkansas’s residential human development centers. Today’s conviction demonstrates that we will punish these individuals to the fullest extent of the law. Residents of these facilities should be provided with the highest quality care."
Tristan S. Gill, 23, of Warren pleaded guilty and was sentenced today by Circuit Judge Don Glover. The Attorney General’s Office prosecuted the case in cooperation with 10th Judicial District Prosecutor Thomas Deen.
On Feb. 16, 2014, Gill was employed as a residential care technician at Southeast Arkansas Human Development Center. Gill used a spray bottle belonging to the facility to spray bleach in a developmentally disabled client's face. The victim suffered chemical burns on his face and blistering for several days, but no permanent injury. The conviction for adult abuse is a Class-D felony, and the conviction for criminal use of property is a Class-B felony.
Rutledge Statement on the Passing of Cleburne County Sheriff Richard SwainMon, Jan 26, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge released the following statement today in response to the passing of Cleburne County Sheriff Richard Swain:
"For the second time in less than a week, Arkansas has lost another dedicated member of our local law enforcement leadership. I am saddened by the loss of Cleburne County Sheriff Richard Swain, who passed away early Sunday morning after a much-too brief tenure as sheriff. Sheriff Swain was elected this past November, and I know he was dedicated to serving the wonderful people of Cleburne County. My thoughts and prayers are with Sheriff Swain's wife, Pat, and their children, his colleagues and all those who call Cleburne County home."
Sheriff Swain was elected as the Cleburne County Sheriff in November 2014 and took office on Jan. 1 of this year. Sheriff Swain retired as an inspector with the Shelby County, Tenn., Sheriff’s Office in 2002. Prior to his election as sheriff, he served as jail administrator with the Cleburne County Sheriff’s Office and held the rank of captain.
Rutledge Seeks Second Oral Argument in Challenge Against Amendment 83Fri, Jan 23, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge announced today that she has submitted a motion to the Arkansas Supreme Court requesting a second oral argument in the appeal of the challenge against Amendment 83 to the Arkansas Constitution. Attorney General Rutledge released the following statement:
“Two Associate Justices were not seated on the Arkansas Supreme Court when the first oral argument was held in November 2014, and Chief Justice Hannah was absent due to a national meeting of chief justices. I believe the Court would benefit greatly from a second oral argument. The people of Arkansas should know that as Attorney General, I will vigorously defend any challenge against Arkansas’s Constitution.”
Because the U.S. Supreme Court has announced that it will review the marriage cases arising out of Michigan, Ohio, Kentucky, and Tennessee, the Arkansas Supreme Court may decline to announce a decision until after the U.S. Supreme Court rules. However, neither side has requested a stay in the case before the Arkansas Supreme Court. The Court has the authority to rule on the issues before it, including state constitutional issues that will not be addressed by the U.S. Supreme Court.
Attorney General Rutledge’s predecessor filed a notice of appeal with the Eighth Circuit Court of Appeals in St. Louis on Dec. 23, 2014, regarding U.S. District Judge Kristine Baker’s decision in the separate federal-court challenge against Amendment 83. The State’s opening brief to the Eighth Circuit is due Feb. 17, 2015.
Rutledge Statement on the Passing of Rogers Chief of Police, James AllenThu, Jan 22, 2015
LITTLE ROCK – Arkansas Attorney General Leslie Rutledge released the following statement today after learning that Chief James Allen of the Rogers Police Department passed away:
“I am saddened by the loss of Chief James Allen. Chief Allen was a long-time officer in northwest Arkansas and never wavered, despite a yearlong battle with cancer, from his oath to keep the citizens of Rogers safe from harm. My thoughts and prayers go out to the entire law enforcement communities of Bentonville, Rogers and the greater northwest Arkansas region, as well as Chief Allen’s family and friends.”
Chief Allen led the Rogers Police Department from April of 2011 until his passing. Prior to that, he served as the Chief of Police of the Bentonville Police Department for 22 years.