Mississippi and Connecticut have both sued Moody's, and the Justice Department is also examining the firm's business but the probe remains in a preliminary stage, a person familiar with the matter said. WED EC1-1/13R Endocavity Ultrasound Transducer Probe Securities and Exchange Commission imposed new rules on the rating industry, but it did not ban the issuer pay model under which the ratings agencies operate. The firms are paid by the banks that issue the securities, a model some liken to a restaurant paying a reviewer.
In its 119 page complaint, the Justice Department said S delayed updates to its ratings criteria and analytical models between September 2004 and October 2007, weakening its criteria in a desire to gain more business from the investment banks that issued the securities.
