The US government accused a credit ratings agency of fraud over its ratings of subprime mortgages ahead of the 2008 financial crisis in a civil lawsuit filed late on Monday.
Standard & Poor's will be the first major ratings agency to face action over the global crash in the US.
The government said S&P misled investors by stating that its ratings were objective and "uninfluenced by any conflicts of interest."
Critics have long argued that the agencies have an inherent conflict of interest as they're paid by the same companies whose products they rate.
The agencies have been accused of issuing unduly high ratings before the crisis because of pressure from banks they desired as clients.
S&P, Moody's and Fitch Ratings have been blamed for helping fuel the financial crisis by issuing AAA ratings to trillions of dollars in risky securities backed by subprime mortgages.
The action does not include criminal charges, which would require a higher burden of proof but carry the threat of jail time.
If S&P is found to have committed civil violations, it could face fines and limits on how it does business.
Settlement talks between the Justice Department and S&P broke down last week.
The talks reportedly collapsed over federal authorities' insistence that a settlement should involve at least $1 billion (£640 million).
S&P denies any wrongdoing.
If you appreciated this article then please consider donating to the Morning Star's Fighting Fund to ensure we can keep developing your paper.
Donate to the Fighting Fund here
George Osborne's advice from the International Monetary Fund is like the curate's egg - good in parts.
The government wants to ramp up Western involvement in the Syrian conflict but the cost will be more violence and instability in the region
PCS general secretary urges the trade union movement to step up the fight against the Tory cuts