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AG: TN Receiving $25M of $1.375B Settlement with Standard & Poor

Press release from the office of Tennessee Attorney General Herbert Slatery; February 3, 2015:

Tennessee Attorney General Herbert Slatery announced today that Tennessee, the U.S. Department of Justice, 18 states and the District of Columbia have reached a settlement 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.

The settlement requires S&P to pay $1.375 billion to the states and the Department of Justice. Tennessee will receive $25 million for its role as a lead state in the enforcement actions against S&P.

The state and federal 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 substantial fees from its investment banking clients. The enforcement actions further alleged that S&P 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 acute between 2004 and 2007.

Structured finance securities backed by subprime mortgages were at the center of the 2008 financial crisis. These financial products, including residential mortgage-backed securities and collateralized debt obligations, derive their value from the monthly payments consumers make on their mortgages.

“Standard & Poor’s claimed that its ratings were objective, but as the states alleged, the company allowed its business interests to influence those ratings to the detriment of our national economy,” said Attorney General Slatery. “I appreciate the cooperative work of the states who joined Tennessee in bringing these actions, and the Department of Justice in reaching today’s settlement.”

In addition as part of the settlement, S&P agreed to comply with all applicable state laws and for five years will cooperate with any request for information from any state expressing concern over a possible violation of state law. S&P also agreed to a statement of facts acknowledging conduct related to its analysis of structured finance securities.

“This settlement is the product of good teamwork among all the parties involved and will ultimately benefit all Tennesseans,” said Tennessee Department of Commerce and Insurance Deputy Commissioner Bill Giannini.

In August 2014, the United States Securities and Exchange Commission adopted new requirements for credit rating agencies like S&P that address conflicts of interest and procedures to protect the integrity and transparency of rating methodologies and that provide for certifications to accompany credit ratings attesting that the ratings were not influenced by other business activities.

The S&P settlement documents may be viewed by going online to www.tn.gov/attorneygeneral and clicking on “Filings of Interest.”

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Press Releases

TN, 36 Other States Reach $7M Settlement with Google

Press release from the Office of Tennessee Attorney General Bob Cooper; March 12, 2013:

Google will pay Tennessee and 36 other states $7 million and revamp its consumer privacy practices as a result of an agreement filed today, Attorney General Bob Cooper has announced. Tennessee’s share is estimated at $133,528 as part of the agreement stemming from privacy complaints regarding Google’s collection of data from unsecured wireless networks nationwide while taking photographs for its Street View service between 2008 and March 2010.

The agreement now bans unauthorized data collection and requires Google train its employees on privacy and launch a nationwide campaign to educate consumers on how to protect their information.

“We are pleased Google recognizes consumers’ right to privacy and will no longer collect information during its Street View photography without their permission,” General Cooper said. “I strongly encourage Tennesseans to take more proactive steps to secure their personal wireless Internet connection to avoid any other similar privacy intrusions.”

At issue in the case is Google’s Street View maps in which the company used cars equipped with antennae and open-source software that the company acknowledged collected network identification information. It then used those that information for other services such as geo-location applications. Google has admitted it simultaneously collected and stored information gathered from nearby home and business wireless networks without permission.

While Google represented it was unaware it was gathering unsecured wireless data while the Street View cars were driving by, the company acknowledged the information it collected may have included Internet addresses of requested Web pages searches, partial or complete email communications, and any confidential or private information being transmitted to or from the network.

Google has since disabled or removed the equipment and software used to collect the payload data from its Street View vehicles, and agreed not to collect any additional information without notice and consent.

As part of the agreement, Google has agreed to segregate and secure the information it gathered and will destroy the information as soon as legally practicable. Further, Google agreed that the data was not used, and will not be used, in any product or service. The company also agreed that the information collected in the United States was not disclosed to a third party.

Other key elements of the agreement require Google to run an employee training program for at least 10 years. It must also conduct a public service advertising campaign to help educate consumers about steps they may take to better secure their personal information while using wireless networks.

View the Assurance of Voluntary Compliance here: http://www.tn.gov/attorneygeneral/cases/google/google.html.