February 1, 2015 / 8:49 PM / 3 years ago

Justice Department probing Moody's for mortgage deal grades: WSJ

(Reuters) - The U.S. Department of Justice is investigating Moody’s Investors Services for issuing favorable grades on mortgage deals in the lead-up to the financial crisis, the Wall Street Journal reported on Sunday, citing people familiar with the situation.

A screen displays Moody's ticker information as traders work on the floor of the New York Stock Exchange January 20, 2015. REUTERS/Brendan McDermid

The federal probe of the ratings agency, a unit of Moody’s Corp MCO.N, comes as the Justice Department nears a settlement with Standard & Poor’s Ratings Services, a unit of McGraw Hill Financial Inc MHFI.N, over similar conduct, the Journal reported.

Justice Department officials could not be immediately reached for comment by Reuters on Sunday.

Former Moody’s executives and Justice Department officials have been meeting to discuss ratings of complex securities prior to the 2008 financial crisis, the Journal reported.

The investigation is in a early stage and it is still unclear whether it will lead to a lawsuit, the Journal reported.

The probe comes as the Justice Department nears a $1.37 billion settlement with Standard & Poor’s for similar alleged conduct, the newspaper reported. The Justice Department sued Standard & Poor’s in 2013 for what it said were misleading ratings of residential mortgages leading up to the 2008 financial crisis.

(Clarifies in fourth paragraph that former, not current, Moody’s executives have been meeting with Justice Department officials.)

Reporting by Suzanne Barlyn and Peter Cooney; Editing by Eric Walsh

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