(Reuters) – Standard & Poor’s said it expects to be the target of a U.S. Department of Justice civil lawsuit over its mortgage bond ratings, the first federal enforcement action against a credit rating agency over alleged illegal behavior tied to the recent financial crisis.
Shares of McGraw-Hill Cos, the parent of S&P, plunged 13.8 percent on Monday after news of the pending lawsuit surfaced, their biggest one-day percentage decline since the 1987 stock market crash, according to Reuters data.
An announcement of a lawsuit is expected on Tuesday, a person familiar with the matter said.
The news also caused shares of Moody’s Corp, whose Moody’s Investors Service unit is S&P’s main rival, to slide 10.7 percent.
It is unclear why regulators may be now focusing on S&P rather than Moody’s or Fimalac SA’s Fitch Ratings.