S&P May Be Target of Federal Probe

The other major ratings services, Moody’s Corp. (NYSE: MCO) and Fitch Ratings were not named as possible investigation targets according to the WSJ report.

All three of the agencies have been severely criticized for their starry-eyed ratings of subprime mortgage bonds just before the real estate collapse. The commission that studied the collapse named the ratings agencies among the “key enablers of the financial meltdown.”

At issue is whether or not S&P and possibly the other agencies broke securities laws or did they just miss all the signals. The former is big trouble; the latter is a big embarrassment.

For McGraw-Hill, which recently sold its education division so it could focus on its financial services businesses including S&P, a blizzard of civil lawsuits is not what the company needs right now. Shares are down about 3% in mid -afternoon trading, at $56.66 in a 52-week range of $42.02 to $58.62. Shares traded within $0.25 of the high earlier today.