Claims focused on ratings of structured finance securities

INDIANAPOLIS – Indiana Attorney General Greg Zoeller filed a state lawsuit, on behalf of Secretary of State Connie Lawson’s office, against Standard & Poor’s for allegedly putting profits and market share above its objectivity when rating structured finance securities.

As the lawyer for state government, Zoeller filed the action in Marion County on behalf of the Indiana Secretary of State’s office and Securities Commissioner Chris Naylor. This lawsuit is part of a joint effort by more than a dozen states and the U.S. Department of Justice, all of which have filed complaints against S&P for alleged misconduct involving its analysis of toxic mortgage-backed securities.

“Investment banks, investors and regulators look to the nation’s credit rating agencies to independently rate the risks of financial products,” Zoeller said. “Leading up to the worst financial crisis since the Great Depression, Standard and Poor’s made promises of objectivity but misled investors into purchasing financial products – like mortgage-backed securities – that they might not otherwise have invested in. The State, through its securities enforcement statutes, is committed to taking strong legal action against those that wrongfully mislead investors.”

Zoeller said S&P is paid lucrative fees for rating its clients’ securities which are packaged and sold on Wall Street. The complaint alleges that S&P adjusted its analytical models for rating residential mortgage-backed securities and other structured finance securities to achieve the ratings that its clients desired.

Indiana’s complaint does not challenge S&P’s ratings of Indiana’s state and municipal securities. The complaint alleges McGraw Hill Financial, Inc. and its subsidiary Standard & Poor’s Financial Services, LLC violated the Indiana Uniform Securities Act by misrepresenting the objectivity and independence of its rating process with respect to certain structured-finance securities. The lawsuit primarily seeks injunctive relief to force S&P to comply with Indiana securities laws and civil penalties.

“I believe S&P intentionally misled the marketplace at a time when our country needed accurate information the most,” Lawson said. “Through enforcing Indiana’s securities law, we plan to hold S&P accountable for its actions. Both retail and institutional investors deserve accurate, independent and objective ratings when investing and we cannot have companies defrauding the marketplace in the pursuit of ill-gotten gains.”

According to the lawsuit, the company intentionally misrepresented that its analysis of structured finance securities was objective, independent and not influenced by its clients’ financial interests from about 2004 to 2012. However, by 2001 the company’s “…desire to maximize revenue and market share by rating as many structured finance deals as possible led S&P to cater to the preferences of large investment banks and other repeat issuers of structured finance securities that dominated S&P’s revenue base.”

Zoeller said other states may also file lawsuits against the company for misleading investors while emphasizing its independent and objective ratings process.

Zoeller and Lawson thanked Deputy Attorney General Lisa Wolf and Securities Division Litigation Counsel Matthew Allen for their work on this case.

INDIANAPOLIS – Now that the 2013 session of the Indiana General Assembly has come to a close, state lawmakers will begin preparing for the 2014 legislative session by continuing their work in interim study committees.

Referred to as “the interim,” the period between sessions provides legislators with an opportunity to review issues in greater depth and determine whether to proceed with legislation when we return next year.

A few weeks back, leaders met to decide what topics would be discussed this summer. Committees will start meeting soon and most should have their work done by the middle of fall.

There are two types of study committees that meet.

Some are created for the interim to look at a variety of topics under a general heading. Others have been created through state law and meet every year to conduct ongoing work on topics.

I am very fortunate this year to have been appointed to four legislative interim workgroups that will be studying issues of great interest to the Indiana House District 77 citizens I represent at the Statehouse in Indianapolis:

•Commission on Improving the Status of Children in Indiana
•Child Services Oversight Committee
•Interim Study Committee on Driver Education
•Council on Evansville State Hospitals
Let’s take a look at some other topics we’ll be studying this year:

The Interim Study Committee on Common Core Educational Standards will examine how Indiana measures achievement in relation to the national Common Core standards. Members will consider the best ways to implement standards by talking to teachers and other local school officials, as well as the Superintendent of Public Instruction.

The School Safety Interim Study Committee will consider what can be done to protect our children in the wake of recent tragedies in places like Newtown, Conn.

The recent breakdowns on ISTEP testing will be examined in greater detail by the Commission on Education. Other topics for this group will include non-public school scholarships, teacher preparation programs, changes to the length of the school year, and safety issues for student athletes.

We will continue to look at the feasibility of mass transit transportation across Indiana through the work of two groups: the Central Indiana Transit Study Committee and the Joint Study Committee on Infrastructure Assessment & Solutions.

And of course, it wouldn’t be a legislative interim without looking at taxes and budgets. The Commission on State Tax & Financing Policy will handle most of that work this summer, including an examination of the use of land banks in the buying and selling of abandoned properties. This issue has gained attention in recent days after two Indianapolis city employees were indicted by the federal government and charged with taking kickbacks.

In the weeks to come, assignments to these committee will be parceled out. I will keep you posted about the work I will do, then talk about these issues in greater details throughout the summer.

State Representative Gail Riecken
Indiana House District 77

The Evansville Parks and Recreation Department is currently reviewing the city’s Adopt-A-

Spot program. The action was prompted by a decision last year by Keep Evansville Beautiful to discontinue maintenance of several Adopt-A-Spot locations to focus more on beautification projects at major city entrances.

The Parks Department received very little interest from citizens in the Adopt-A-Spot program in 2012, but a few companies have come forward to adopt spots this year. Most adopt-a-spot locations are in public parks and street medians. However, citizens and companies interested in participating in the program are welcome to suggest other locations on city right-of-way.

Participants must sign a three-year agreement with the Board of Park Commissioners to maintain the area and assume all costs and labor. For more information on the program, contact Parks Department Ex. Dir. Denise Johnson at 435-4161.

Although few areas have been adopted recently, there are some Evansville residents who are continuing to maintain their adopt-a-spot locations, including Gordon Dingman, who has the largest adopt-a-spot site in Evansville. He has maintained the area around Helfrich Park since 2006, spending thousands of dollars to keep the area beautiful.

Attached please find a profile on Gordon Dingman featuring his work to beautify Helfrich Park. If you are interested in contacting Mr. Dingman for an interview, please contact Ella Johnson-Watson at the number above.

In support of the ECHO Housing Corporation-led Jacobsville Join In (JJI), a community development initiative, Vectren committed $15,000 to assist with program and operational expenses. JJI is working with residents and stakeholders in Jacobsville to establish a vision, goals and a quality of life plan for the neighborhood. The community development initiative was established in 2011 with seed money from the City of Evansville’s Department of Metropolitan Development.

A portion of the funding from Vectren will provide support for a full-time community mobilizer who is responsible for coordinating and overseeing all activities of JJI. The remaining dollars will go toward JJI’s early action grant program. Early action grants provide funding for small improvement projects that build neighborhood spirit and support the vision and goals. Nominal grant funding of $250 to $1,000 is made available to individuals, groups and organizations to plan and implement neighborhood improvement projects.

“We value Vectren’s support, and while we have already begun to see JJI’s impact in the Jacobsville neighborhood, the additional funding from Vectren will help accelerate our efforts,” said Jennifer Mason, JJI community mobilizer.

In April, Jacobsville residents and stakeholders envisioned neighborhood accomplishments taking place over the next ten years. The collective ideas were divided into seven working groups, and members of each group will build a plan to address the key areas for the neighborhood. The seven key areas identified include business corridors, employment, infrastructure and parks, housing, youth and education, safety and cleanliness, and neighborhood pride and events.

“We have a strong focus on community redevelopment and revitalization,” said Jeff Whiteside, Vectren vice president of community sustainability and president of the Vectren Foundation. “The work being done in Jacobsville is driving sustainable improvements for the individuals who call this neighborhood home both today and in the future.”

Saturday, June 29, 2013
Mayor Winnecke will be at the Plumbers and Steamfitters Local 136 annual union picnic at Burdette Park. He is scheduled to arrive around 11:30 a.m.
Mayor Winnecke will be a guest at the annual Kappa Alpha Psi Fraternity’s Black & White Masquerade Ball. The ball will be from 6 to 9 p.m. at The Center.

Sunday, June 30, 2013
Mayor Winnecke will spend the afternoon at Victoria National Golf Course in Warrick County for the final day of the 2013 United Leasing Championship tournament.